When you talk about an improved economic standing on any scale, it is inevitable to also discuss the taxation system that enables the government the luxury of its own stability and consistent growth.
And one of the many sectors or industries that have undergone and is still undergoing various changes in taxation is the property market in Cambodia. According to the CEO of Cambodian Investment Management, Mr. Anthony Galliano, this has been causing both problems and solutions in the system.Tax for Businesses:
Generally, Galliano says, it’s been more difficult for businesses who have not been following best practices over the years and have either been evading or unintentionally neglecting tax obligations.
This is because businesses who are renting out office spaces are required to present property tax receipts which should come from the property owners. If the owners of these properties have not been paying tax, this causes an issue with the ability of the companies to register with the Ministry.
He says, “we can see it from those that are registering businesses that perhaps the owners of those buildings have not paid tax in the past. And there are some of those that are seeking to rent property and needing those tax receipts to register their business, they’re unable to get it because the owner hadn’t paid it in the past.”Personal Tax:
Galliano continues to say that the trouble with taxation with renters may be because of an “apathetic” view of taxation in Cambodia, which may be perceived as personal tax.
But since there is a stricter implementation now, he says that apathy doesn’t really get them far enough. They are forced to educate themselves about the laws of taxation and to actually pay their due diligences.
Galliano says, “If you’re a person that just owns a property, then you’re responsible for paying that tax as the owner.”He continues to say, “For sure, if you’re owning property, you’re responsible for registering that property and paying the tax.”
And now that there is an urgent call for compliance, owners really do not have much of a choice than to pay the tax or else risk paying penalties and other forms of consequences that may result from their resistance.Tax Change Perception:
These issues can now be viewed in two ways. You can look at it as a form of inconvenience or you can look at it as a form of straightening out the system and developing better ways of doing transactions in the country. This provides protection for the investors as well because they now have a standard of which to base the legality of their investments.
But Galliano adds that, moving forward it may get easier for investors as developers now provide property management services for the owners. This means that there will be a more streamlined process of paying and collecting tax which would then help the economy sustain the growth.
Whatever the case, what is important is to make sure what types of tax you should be paying and actually paying them - so as to avoid any conflict with the law enforcement agents and entities.Learn more about Cambodian property tax law!