Cambodia's capital gains tax decision ‘not final’ , says PM Hun Manet

Cambodian PM Hun Manet. - Phnom Penh Post/ANN

PHNOM PENH (Phnom Penh Post/ANN): Prime Minister Hun Manet has clarified to the public that the Cambodian government has not made a final decision to impose the Capital Gains Tax early next year, as widely reported.

He also stressed that no new taxes that might burden the public would be introduced, explaining that only existing tax framework is being examined in the lead-up to the government-private sector forum scheduled for November.

Manet’s clarification followed strong public reactions to comments made by General Department of Taxation (GDT) director-general Kong Vibol during a recent interview that the capital gains tax – originally slated for a 2020 introduction – would come into force on January 1, 2024.

Many social media users decried the plan, citing economic hardship, with some even going so far as to declare it a new initiative by the seventh-mandate government.

Manet reiterated that the capital gains tax was not new, noting that the GDT had delayed collecting it for the past three years. He suggested that if nothing changed, it would likely be reintroduced next year, but reiterated that a final decision had not yet been made.

He said he had tasked Minister of Economy and Finance Aun Pornmoniroth with discussing tax policy with the private sector, so any problems could be raised and fine-tuning could be considered at the upcoming forum.

“Don’t be concerned about this issue. I have instructed the GDT to clarify tax policy and the principles of providing economic incentives. The government has already introduced the policy and principle. In the future, we will consider changes to assist the private sector,” he added.

The premier reminded the public that his November meeting with the private sector to discuss the existing tax framework and any necessary actions that may facilitate the success of the private sector will take place as scheduled.

Manet also insisted that his government has no intention of creating any new taxes.

Hong Vannak, an economist at the Royal Academy of Cambodia’s International Relations Institute, said Vibol had previously revealed the GDT’s plan to levy the capital gains tax though he was not emphatic about collecting it, as it was still under consideration. He believed people had been misled about Vibol’s remarks.

He added that the problem of tax collection falls to the state, and that people are obliged to pay taxes, despite current economic conditions being unfavourable. He noted that the current situation had not paralysed the Cambodian economy, with the Kingdom’s international trade remaining relatively healthy.

“Those who have objected to the re-introduction of the old tax should negotiate with the GDT to find a solution, rather than try to raise a public outcry,” he said.

Social media influencer Kanetha, who shared a video discussing the tax on September 27, said tax rates in Cambodia are still low when compared with many other countries.

She also pointed out that the 20 per cent capital gains tax would likely only affect the wealthy and the owners of large businesses, and was unlikely to harm the poor.

“Thus far, wealthy people have not paid this tax, even when their businesses yielded profits. Don’t you want the government to tax the rich, so it can build bridges, roads and schools for all of us?” she proclaimed.

Kanetha added that it was her belief that the tax would not only benefit the public, but would also attract foreign investment, as she said certain investors are waiting for Cambodia to establish clearer laws and policies relating to the tax sector.

Yang Kim Eng, president of the People’s Centre for Development and Peace, was of the view that the state should consider people’s relaxing tax obligations, as the private sector had been hit hard by the Covid-19 pandemic and the global economic crisis.

“Implementing the capital gains tax in 2024 may place a high burden on the public. Some businesses have closed their doors, while some are only remaining open thanks to bank loans. The state should take this into consideration and not impose too many taxes – they should give the private sector time to build resilience first,” he said.

He suggested the government explain people’s tax obligations to them as clearly as possible. He also believed that businesses that would encourage the rebuilding of the tourism industry should be supported, in order to strengthen the economy. - Phnom Penh Post/ANN

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