The General Department of Taxation (GDT) recently convened a significant meeting with representatives from the European Chamber of Commerce in Cambodia (EuroCham) and the American Chamber of Commerce in Cambodia (AmCham), to discuss various taxation-related concerns and promote cooperation between the government and the private sector.
The meeting was co-chaired by H.E. Kong Vibol, Minister Attached to the Prime Minister and General Director of the GDT, Tassilo Brinzer, Chairman of EuroCham, and Devin Barta, President of AmCham, and took place on October 5, 2023.
The meeting covered seven key agenda items, including Tax Auditor Bonus, Excessive Interest Charged on Reassessments, Tax Incentives Requiring Advance Approvals, the Process of Approving “Audit Report” and “Proper Accounting Records,” Voluntary Disclosure, Timeframe for the Implementation of a New Law, and Stamp Duty on Share Capital Increase.
Vibol commenced the discussions by expressing his appreciation for the transparent and open dialogue, emphasizing the importance of identifying the root causes of taxation-related issues and promptly addressing them. The private sector, represented by EuroCham and AmCham, acknowledged the GDT and Ministry of Economy’s support, extending further congratulations on the successful implementation of reforms and efforts to reduce bureaucratic red tape, especially through digitalisation.
The private sector representatives expressed concerns about a lack of consistency on how taxpayers are being audited, sharing their observation that some cases showed the taxpayer clearly in the wrong due to a variety of factors, while other cases were not as clear and caused confusion on whether it was the taxpayer or the auditor who was correct.
The private sector suggested several solutions to this problem, including:
- Publish Tax Rulings: To increase transparency and predictability, all tax rulings should be made public on the GDT’s website, with a focus on providing content in English to reduce interpretation differences.
- Clearer Regulations: Detailed regulations should be in place to eliminate vagueness when implementing tax laws.
- Immediate Implementation: Tax laws should be implemented after they are announced, with past wrongdoings exempted.
In response, the GDT expressed committed to promoting taxation predictability by consolidating relevant tax provisions into a unified Law on Taxation and working on translations. They also encouraged direct reporting of issues so they could be addressed promptly.
Private Sector And GDT Hold Open Dialogue
The private sector raised some concerns about tax auditor bonuses, particularly regarding potential bias and conflict of interest. The GDT’s side defended the bonuses as essential to maintaining auditor neutrality and combating corruption, while acknowledging the need for some reviews and improvements.
Excessive interest charged on reassessments was another topic of discussion, with the private sector’s side asserting that the current interest charges are excessive, punitive, and exceed market rates. The GDT argued that the charges serve as a deterrent to non-compliance and emphasised that Cambodia’s rates were competitive within ASEAN.
The private sector also pointed out that the need for advance approvals for tax incentives was impractical for businesses, to which the GDT proposed specific cases to address the concerns, encouraged online applications and further cooperation for training.
Other topics, including the process of approving audit reports and proper accounting records, voluntary disclosure, and the timeframe for implementing new laws, were addressed with mutual understanding between the private sector and GDT.
Continued Commitment To Partnership
The meeting concluded with an agreement to continue the positive partnership between the government and the private sector. The private sector emphasized the importance of English content publication to attract more investors and reiterated its willingness to cooperate with the government to promote businesses in the formal sector and make the informal sector less attractive.
In response, GDT expressed gratitude for the input and pledged to address concerns to enhance transparency and predictability, reiterating its goal to serve the business community and welcoming direct communication for resolving any issues promptly. The meeting demonstrated the commitment of both the government and the private sector to working together to improve Cambodia’s business environment.
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