Profit-tax revenue leads first half surge
Profit-tax revenue leads first half surge
Cambodia's tax department collected $829 million in tax revenue during the first half of the year, 18 per cent more than during the same period a year earlier, led by surge in profit-tax revenue, according to government data released late on Tuesday.
Figures provided by the General Department of Taxation (GDT) did not break down the revenue share by tax category, but indicated that profit-tax revenue soared 58 per cent during the period. Special-tax and salary-tax revenue also saw significant increases, rising 25 per cent and 19 per cent, respectively.
Profit tax is a tax on the realised profits of companies, usually 20 per cent.
Michael Gordon, tax and corporate services partner of accountancy firm KPMG Cambodia, said there could be a number of reasons for the surge in profit-tax revenue, though most likely were company profits exceeding expectations or tax officials more aggressively auditing companies’ tax returns.
He explained that at the start of the tax year companies are required to estimate their expected annual profit and pay the calculated profit tax owed in advance in monthly instalments. If a year-end audit reveals companies have understated their profit estimates, whether deliberately or due to unexpectedly high profit growth, they are liable to make additional tax payments to cover the balance owed.
“If they haven’t paid enough instalments to cover their tax bill [at the end of the year] then they must pay the balance,” Gordon said.
He added that the increase in profit-tax revenue could also be the result of better tax compliance, with more companies filing tax returns.
Teng Delux, an economic lecturer at University of Cambodia, said the increase in tax revenue would help the government to allocate funds for state spending on civil servant salaries and to develop infrastructure.
“An increase in tax revenue means the government has more capacity to build better services in, for example, infrastructure or the health or education sectors,” he explained.
He said the challenge now was to ensure that the additional revenue was used to improve services, dispelling concerns Cambodians would never see any benefit from the swelling state coffer.
