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Tuesday, 11 December 2012

Cambodia's tax revenue totals $683 million

Tuesday, 11 December 2012
May Kunmakara
Phnom Penh Post

The Cambodian government collected $683 million in taxes over the first 11 months of this year, according to data from the General Department of Taxation released last week.

An economist said the increase in domestic tax revenue emphasised that Cambodia still has room for improvement in tax collection and should aim to eliminate reliance on foreign aid. However, it warned that there needs to be more diversification of taxes imposed.

According to a statement from the GDT, revenues were collected from various taxes such as: tax on profits, withholding tax, salary tax, Value Added Tax, turnover tax, vehicle tax, patent tax and property tax.

Kang Chandararot, director at the Cambodia Institute for Development Study, said the rise of domestic tax revenue reflects the improvement of tax collection and increasing economic activity.

“It emphasises that we have a lot of hope to build a stronger base to repay foreign debt, and reduce reliance on foreign aid. We are happy to see the revenue grow in domestic tax,” he said.

“However, reducing our reliance on foreign aid requires us to improve and diversify our tax collection,” he added.

“We also notice that we have a lot of room to impose tax. At the same, we also need to make reforms to reduce some unnecessary expenses. I think tax collection expansion is a must for the economy,” said Chandararot.

The opposition party claimed the revenue was far from the potential figure, citing corruption as the reason for the disparity.

Yim Sovann, a spokesperson for the Sam Rainsy Party, said Cambodia currently collects around 12 per cent of its GDP from taxes, which is very low compared to other countries in the region, like neighbouring Thailand.

“Our domestic revenue does not match the actual amount which can be taken,” he said.

“We lose between $500 million to $1 billion per year because of corruption,” he added, saying that a lot of revenue has not been fully collected from economic land concessions, Cambodia’s 50 casinos, and tickets sold to visit Angkor Wat.

Last week, the government approved an increase in national budget expenditure to nearly 13 per cent for 2013 to more than $3 billion from this year’s $2.7 billion.

Prime Minister Hun Sen yesterday raised no concern over the budget rise, saying the revenue also continues to increase.

“If the expense is more than $3 billion, the revenue should be more than $3 billion.”

Sovann said the increase of expenditure puts a greater burden on the country, resulting in the government seeking foreign aid as a solution.

“The government cannot generate enough domestic revenue to meet the expenditure,” he said.

“Of course, they can increase the revenue if they strengthen the tax collection system. They always borrow around $1 billion [in foreign aid] to meet their expenses,” he added.

According to the draft national budget for 2013, Cambodia currently owes $3.6 billion in foreign debt.

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