Gov’t allows agriculture sector to import heavy machinery tax free

By Soun Sophalmony

The Mekong Times

To give the agricultural sector a much-needed boost as the global food crisis bites, the government has decided to effectively exempt tax on the import of all forms of heavy agricultural machinery, little or none of which is manufactured in Cambodia. Prime Minister Hun Sen announced the measure at the 13th Government-Private Forum Wednesday in response to a request from the forum’s Agricultural Working Group, though he said the government approved it before the Khmer New Year.

“I inked on a sub-degree April 11, lowering the custom tariff to zero and imposing Value Added Tax (VAT) exemption for goods imported to serve the agricultural industry.”

He said the decision would affect imports of tractors, plowing machines, rice mills, harvesting equipment and machines for producing animal feed, zinc, aluminum, copper and nickel.

Opposition officials claimed the measure does not go far enough to ease the burden of the nation’s vast agrarian population.

“The tax exemption policy is good, but it can not help [farmers] cope with [rising] oil prices as oil tax remains high. So, the measures are not complete,” said Sam Rainsy Party Secretary General Eng Chhay Eang.

“The government has to lower gasoline prices and reduce the revenues of petrol companies so it can promote the agriculture industry,” he said. “The government always avoids mentioning reductions in gasoline tax.”

Yang Saing Koma, executive director of Cambodian Centre for the Study and Development of Agriculture, said the tax exemption would benefit farmers who have many plots of land, but not the nation’s vast majority of smallholders.

Chea Vannath, former director of the Center for Social Development, asked why the government is using the state budget to offset tax exemptions.

“Could the agricultural equipment imported with a tax exemption be smuggled to other countries?” she asked. “Before allowing tax exemptions, [the government] should make a study. If there is none, the imported products could be smuggled to other countries.”