Tax policy touch-ups for projects of financing deals
Tax policy touch-ups for projects of financing deals
The General Department of Taxation (GDT) on January 31 instructed relevant ministries, institutions and taxpayers to sort out tax obligations concerning projects under memorandums of understanding (MoU) as well as grant and loan agreements, as per applicable laws, and submit records of potential tax implications and other pertinent information to the GDT.
The directive purportedly aims to ensure the effective, efficient and transparent management of tax incentive policies; make it easier for taxpayers to meet their obligations; and support initiatives that serve the public interest.
The document places a special focus on such agreements struck with the government or counterparts overseas, or international entities such as development agencies or other partner organisations.
It orders relevant agencies, businesses and organisations – financing recipients, project managers or otherwise – that carry out activities stemming from these deals to specifically notify the GDT of possible tax breaks, for the department to record, review and figure out whether they apply.
The notification to the GDT must have the agreement attached, along with the linked project or sub-project agreement, the latest corresponding patent tax certificate, tax returns and financial statements for the previous three calendar months, and the proper application, the directive says.
Royal Academy of Cambodia economics researcher Ky Sereyvath described the directive as a government tool to ramp up tax collection and prevent leakages under the guise of humanitarian assistance.
The law stipulates that profits are taxable even if donated to humanitarian efforts or for other reasons, he told The Post.
“Hence this notice is a prompt for all institutions to give more thought to settling levies, and to go pay their taxes as specified by the tax laws of the Kingdom,” he added.
The directive is consistent with articles 25, 57 and 60 of the 1997 Law on Taxation and its amendments, as well as Sub-decree No 114 on value-added tax (VAT) dated December 24, 1999, according to the GDT.
