Tax revenue surpasses $1.9B
Tax revenue surpasses $1.9B
The Ministry of Economy and Finance’s General Department of Taxation (GDT) collected $1.90927 billion in taxes in the first eight months of 2021, down by $151.3 million or 10.60 per cent from the same period last year.
This represents nearly 85.12 per cent of the $2.24307 billion target set by the Law on Financial Management for 2021, according to the GDT.
Last month alone, taxes collected amounted to $192.3 million, surging by $21.68 million or 12.71 per cent over August 2020, it said. Last month’s figure represents 8.6 per cent of the 2021 target.
Federation of Associations for Small and Medium Enterprises of Cambodia (Fasmec) president Te Taingpor blames the overall dip in January-August revenue squarely on the February 20 community outbreak of the novel coronavirus and its aftermath.
He told The Post: “How could it [tax revenue] not go down if the Covid-19 outbreak resulted in many businesses closing or moving sales exclusively online?”
Nonetheless, he maintained that the slump in tax revenue is no cause for concern, noting that business activity is gradually picking up, and that the government’s Covid-19 vaccination campaigns have reached more than 70 per cent of the national population.
On top of that, a range of draft laws were approved by the National Assembly (NA) on September 9, some of which will add even more lustre to the allure of trade gains and economic benefits from the Kingdom, and hence drive new growth, he surmised.
One of these was the draft law on the ratification of the bilateral Cambodia-China Free Trade Agreement (CCFTA).
Taingpor views the CCFTA as an important step towards strengthening and expanding Cambodia’s international trade, notably providing the Kingdom with improved market access to the world’s most populous nation for fresh and processed agricultural products.
On the other hand, he said, Cambodia will also have the opportunity to import raw materials and modern machinery at low duties for the production of goods for export.
After sailing through the NA, the draft law is to be sent to the Senate for a vote. Once approved, the bill will be returned to the NA to proceed with a signature from the King – or acting head of state – to become law.
Taingpor expects the CCFTA to enter into force early in October, one month after NA approval.
Cambodia Chamber of Commerce vice-president Lim Heng ascribed the decline in tax revenue to two main factors: a decrease in business activities due to the lockdown and the introduction of tax breaks for the sectors most severely hit by the Covid-19 crisis.
He expects revenue to recover as the Covid situation subsides, as he pinned hopes for a fresh crackdown on imported right-hand drive vehicles to force more owners to convert them to left-hand drive and pay import taxes.
“The drop in internal tax revenue was largely due to the lockdown imposed to prevent the spread of Covid-19, which disrupted a large number of businesses.
“At the same time, the Ministry of Economy and Finance also granted tax exemptions and breaks for the most affected sectors, such as tourism and restaurant businesses,” Heng said.
He echoed Taingpor’s sentiment that the draft laws relating to investment and trade that were given the NA green light last week would provide the Kingdom an “investment magnet”.
Hong Vanak, director of International Economics at the Royal Academy of Cambodia, also downplayed the tax revenue result, highlighting the progressive improvement of the Covid situation.
But he emphasised that tax collection in Cambodia has historically lacked efficiency and transparency.
“The GDT should find more ways to modernise administration for taxpayers, especially for those engaged in the construction sector, by improving the app and making management as well as tax collection more efficient,” Vanak said.
