Tax collection may hit snags in 2023: Vibol

• Published date: 10 March 2023
• Publication title: The Phnom Penh Post

Tax collection may encounter speed bumps this year amidst the convergence of global crises, as signalled by the finance ministry's downgrade - announced in late January - of Cambodia's 2023 economic growth forecast from 6.6 per cent to 5.6 per cent, according to General Department of Taxation (GDT) chief Kong Vibol.

Vibol was speaking at a March 6 workshop on income tax obligations, completing annual income tax returns, investigations of tax related offences, and anti-money laundering.

The GDT said that it collected $3.45511 billion in revenues last year, exceeding the $2.81955 billion annual target by 22.54 per cent and marking a 24.20 per cent jump over the total that it had reported for 2021. The 2023 target has been increased by 26.68 per cent to $3.57170 billion, which is just 3.37 per cent more than the amount collected in 2022.

Annual GDT revenue targets are set by the Law on Financial Management for the corresponding year.

Vibol remarked that although Covid-19 management remains up-to-date and effective, the Russo-Ukrainian conflict, global geopolitical crises, and inflationary pressures, compounded by declining purchase orders from international buyers, have dampened Cambodia's economic growth.

The ministry's roughly one-percentage-point downgrade in nominal gross domestic product (GDP) growth is immense, and the impacts that it reflects could pose difficulties for tax collection, he stressed, adding that leaders of large companies have been bringing up some of the foreseeable risks to their business operations this year, at a number of meetings.

On the other hand, the Financial Action Task Force's (FATF) removal of Cambodia from its 'money laundering grey list' - officially known as 'Jurisdictions Under Increased Monitoring' - and placement in the 'white list' bodes well for efforts to attract more foreign investors, and will facilitate money transfers to and from the Kingdom, he opined.

Cambodia was relisted on the grey list in 2019 by the FATF - an intergovernmental body set up to develop and promote policies to combat international money laundering and the funding of terrorism - after it had previously been removed in 2015.

The Kingdom's relisting was largely pinned on the influx of Chinese casino investments in Sihanoukville and a perceived lack of law enforcement resources dedicated to fighting money laundering and its associated crimes.

Hong Vanak, director of International Economics at the Royal Academy of Cambodia, commented to The Post on March...