In a comprehensive meeting held on May 13, 2024, the General Department of Taxation (GDT) and representatives of the private sector gathered to address a range of tax-related issues. The meeting, conducted at the GDT headquarters in Phnom Penh, was led by H.E. Kong Vibol, Minister Delegate to the Prime Minister and Director General of the GDT, alongside Oknha Sok Piseth, Co-Chair of the GDT and Private Sector Working Group. The event saw the participation of key figures from the private sector, industry associations, and senior GDT officials, all working together to find solutions to ongoing challenges.
Updates to e-Filing System Requested for Withholding Tax Adjustments
One of the primary issues discussed was the need for updates to the e-Filing system, particularly concerning the management of withholding tax under the accrual basis accounting method. The private sector representatives emphasized the difficulties in reporting withholding tax in the month of the transaction, especially when the actual transaction might not occur until a later period, necessitating adjustments in subsequent months. The GDT acknowledged this concern and agreed to update the e-Filing system within a month to facilitate smoother adjustments. Additionally, the GDT encouraged the private sector to promote the use of the GDT Tax Prefiling App, designed to assist small taxpayers in filing their tax returns.
Recording Negative Figures in e-Filing System
The private sector also raised the issue of recording negative figures in the e-Filing transaction journal, essential for complying with the accrual accounting basis. The GDT explained the current technical limitations of the system, which do not allow negative figures. However, they committed to making the necessary updates to accommodate this request, reflecting the GDT’s willingness to work closely with the private sector in enhancing the tax filing process.
Simplifying the Tax Compliance Certification Process
The process of obtaining a tax compliance certificate was another significant topic of discussion. The private sector requested that non-obligatory enterprises be allowed to submit a Compilation Report, rather than an independent audit report, when applying for this certificate. This request stems from the burden that full audits can place on smaller enterprises. The GDT agreed to this modification, allowing greater flexibility and acknowledging the private sector’s concerns about compliance burdens.
Streamlining Tax Registration Procedures
Concerns over delays in tax registration were also brought to the table. The private sector noted that the tax registration process had taken longer than expected in some cases. In response, the GDT recognized the challenges but also highlighted the necessity of ensuring accurate information to prevent fraud and tax evasion. The GDT committed to reviewing registration requests within four days, provided that the submitted documentation is accurate and complete. The GDT also urged the private sector to assist in strengthening compliance by providing correct contact information and other necessary details.
Addressing Deductible Discounts, Free Goods, and Non-Collectible Debts
The meeting further covered the complexities surrounding deductible discounts, free additional goods, and non-collectible debts. The private sector requested that all types of discounts be considered deductible and that free goods provided to customers should not be treated as taxable sales. The GDT responded by agreeing to study these requests and prepare detailed guidelines to ensure clarity and effective implementation.
On the issue of non-collectible debts, the private sector highlighted that banks are allowed to record provisions for non-performing loans as deductible expenses, while other businesses are not. The GDT confirmed that enterprises could deduct expenses for uncollectible debts if clear evidence of attempts to collect is provided. The GDT agreed to issue additional instructions to clarify this process.
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Consideration of Share Premiums and Sector-Specific Tax Obligations
The private sector also sought clarification on the tax obligations related to share premiums, requesting that they be classified as share contributions and not subject to tax. The GDT accepted this request and agreed to review the matter further at the technical level. Additionally, the GDT discussed the tax obligations for businesses in the transport and customs sectors, agreeing to draft specific regulations to address these industry-specific concerns.
Ongoing Technical Discussions and Future Collaboration
Beyond the immediate issues, the meeting revisited five previously agreed-upon points that are still under technical discussion. These included the application of VAT on cross-border sales, the tax treatment of retained earnings during share transfers, and other sector-specific challenges. The GDT assured the private sector of its commitment to resolving these matters, with a focus on aligning with international practices and ensuring fair implementation.
Conclusion and Future Meetings
The meeting concluded with positive feedback from both sides. H.E. Kong Vibol and Oknha Sok Piseth expressed their gratitude to all participants for their constructive contributions. They reaffirmed their commitment to ongoing collaboration and to addressing the private sector’s concerns in a fair and transparent manner. The next meeting is scheduled to continue this productive dialogue, with both sides looking forward to further progress.
Source: Cambodia Investment Review
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