The General Department of Taxation (GDT) has reported a collection of USD $62.82 million in value-added tax (VAT) from e-commerce in the first ten months of 2023.
A report from the GDT states that this revenue was primarily derived from non-resident taxpayers, such as overseas suppliers of products and services imported into Cambodia.
Total tax revenue in the first ten months of 2023 amounted to 12.4 trillion riel (approximately USD $3 billion), indicating that around 85.8 per cent of the expected total tax revenue as stated in the 2023 Financial Law Plan has already been achieved.
Meanwhile, total tax revenue collected in the same period through the online revenue management system was 1.05 trillion riel (approximately USD $261 million), constituting 7.29 per cent of the 2023 Financial Law Plan.
The Cambodian government began implementing VAT on e-commerce in April 2023 for foreign companies, including Google, Meta Inc. (Facebook), YouTube, Alibaba, Microsoft, and TikTok.
In 2023, the government has also targeted tax revenue collection from internal and customs taxes, thus far amounting to a total of USD $5.5 billion, representing a nearly 16 per cent increase from the same ten month period in 2022.
Cambodia’s Growing E-Commerce Sector
The e-commerce sector in Cambodia is experiencing significant growth. According to eCommerce DB, the market is projected to reach approximately USD $1.58 billion in 2023. It is also expected to show a compound annual growth rate (CAGR) of 8.8 per cent from 2023 to 2027, leading to a projected market volume of USD $2.2 billion by 2027.
The 2023 Consumer Report also stated that nearly 30 per cent of Cambodia’s population regularly engages in online shopping, with most consumers residing in Phnom Penh.
A significant 66 per cent of Cambodian consumers primarily rely on their existing knowledge when making purchases. Social media platforms like Facebook, Instagram, and TikTok serve as key sources of information for these shoppers.
Additionally, there has been a surge in local shops offering their services on social media and local marketplaces. This growth in online shopping has been fueled by increased convenience and accessibility to these platforms, as well as the increasing penetration of smartphones and internet connectivity in Cambodia.
In terms of payment methods, electronic transactions are becoming increasingly prevalent. This includes wire transfers, e-wallets, and mobile banking. The rise of electronic payments is being driven by a number of factors, including the increasing availability of secure payment gateways, the growing popularity of online shopping, and the government’s efforts to promote financial inclusion.
The inter-banking QR Code payment system ‘Bakong’, established by the National Bank of Cambodia (NBC), has achieved notable success in the market.
Major Cambodian Tax Reforms
Over the past few years, the Cambodian taxation department has undergone significant digital reforms, enhancing the ease with which taxpayers can manage their tax payments. However, despite these improvements, there are still ongoing challenges, hence, the GDT holds regular tax talks and information-sharing sessions with taxpayers and business associations to facilitate better understanding and cooperation.
H.E. Kong Vibol, Director-General of the GDT, has directed officials at all levels to focus on effectively implementing tax incentives and facilitation measures that can benefit the private sector.
He has stated that the GDT will continue to introduce new solutions and improve existing measures. Vibol has also called for the preparation and update of necessary legal documents such as announcements, instructions and notices, to support the implementation of tax incentives established by the Cambodian government.
The GDT outlined the following achievements in the update report of its activities in the first ten months of 2023:
- Registered 13,433 successful enterprises, with 12,341 coming through the Cambodia Data Exchange (CamDX);
- Organised a total of 843 outreach and training workshops attended by 95,515 participants. This included 375 training sessions with 52,205 participants, and 468 workshops with 43,310 participants;
- Provided consulting services to taxpayers in 98,398 cases, including 60,724 cases consulted through the 1277 call centre;
- Offered support and troubleshooting for IT software programs and systems in 29,924 cases through the e-Tax Service;
- Resolved 368 tax audit complaints;
- Completed the development of five new software systems and carried out 53 system-software updates, totaling 329 instances;
- Examined 365 enterprise applications for benefits under the agreement on the avoidance of double taxation;
- Participated in two major annual meetings, including the 16th Annual Meeting of the Forum on Tax Administration.
Read More on Cambodia’s Taxation: