Land Taxes: Old Policy, New Activity

By Khmer Kaun

Dear Sir,

Troubled by the claim that the land titling scheme introduced as a result of the so-called "Old Policy, New Activity" would not create tax implications, I submit the following notes:

1. The recently passed Law on Financial Management for Year 2013, which amends the relevant provisions on transfer tax introduced by Law on Financial Management for Year 1995, clearly states in Article 12 that any transfer of ownership or possession over any immovable property would be subject to the stamp tax rate of 4% of the immovable property value. The 4% transfer tax was applicable since 1995, but it was not strictly enforced for any undocumented immovable property (that is, any immovable property that is not recorded in land registry but is merely recognized at local authority such as village or commune). But, if any land or immovable property is recorded at land registry as proven by a certificate of ownership, the transfer of that land or immovable property cannot proceed without the tax. Otherwise, it will not be a legitimate transfer.

2. One other Law on Financial Management for Year 2010 introduces another annual tax that must be collected every year at the rate of 0.1% of the taxable value of such land or immovable property. This law is not widely enforced in the meantime, but it may not be so in the future.

3. The Law on Financial Management for Year 1995 also creates and imposes unused land tax, which applies to any land that is not being used. The taxable value is determined by a committee. The current tax rate is 2% of the taxable value per year.

Sincerely,
KK