Cambodia: App for property tax on the way but no increases, says government
Cambodia is undergoing property tax reform but says it is administrative with a focus on improving the registration and valuation of properties while strengthening enforcement and compliance.
The government has previously stated it will not be adding new taxes or increasing tax rates but an app to simplify collection is soon to be launched.
To ensure the success of reform, the General Department of Taxation (GDT) is developing a set of key performance indicators and targets under what it calls a Revenue Mobilisation Strategy for 2019-2023 to monitor the implementation and results of its efforts.
The government is currently conducting a study to enact legislation that will provide the tax administration with full powers to obtain information and data from relevant government institutions for tax purposes.
General Department of Taxation (GDT) Director-General Kong Vibol announced late last year that the app had already been developed but, prior to its release to the public, tax officers would complete comprehensive training on the system and back-up support would also be fully in place.
“[As of] this year, property owners will be able to make their property tax payments through the app, [making the process much easier than before]. Taxpayers will receive an official e-receipt [upon making a payment through the app],” he added.
He added that the app will also manage property data including the recording of the sales and purchases of property, the history of property tax payments and the tracing of unremitted taxes and accumulated tax debt. Taxpayers will be able to update their property or properties on the app as well.
Century 21 Cambodia Executive Director Grace Rachny Fong said that, year-on-year, Cambodian people are well aware of their property tax obligations as property owners. At the same time, there are more campaigns and events from government and relevant institutions to raise the awareness of this issue on tax obligations and how those taxes are used.
“Paying tax will contribute to economic growth,” said Grace. She added it is of key importance for the government to inform citizens about any changes.
At the same time. an Asian Development Bank (ADB) report titled Mapping Property Tax Reform in Southeast Asia says property taxes are underused in developing the continent.
However, it adds, with the right reforms, countries including Cambodia could generate vital revenue towards achieving the UN’s Sustainable Development Goals (SDGs).
The SDGs are a collection of 17 interlinked global targets designed to be a “blueprint to achieve a better and more sustainable future for all”. They are intended to be achieved by the year 2030.
The ADB report presents an analysis and recommendations to improve the efficiency of tax systems in developing Asia by mobilising domestic resources to achieve the goals by 2030.
The ADB said in a 2020 report hat property taxation has significant revenue potential for developing countries and is widely regarded as one of the best forms of taxation for promoting inclusive economic growth.
In 2017, regional revenues from taxes on property as a percentage of gross domestic product (GDP) were the highest in Cambodia (0.60 percent).
From the different categories of taxes on properties, recurrent property taxes – those on land, houses and other buildings – have the largest revenue share of all property tax in the Philippines (79 percent), followed by Thailand (51 percent). By contrast, the reliance on recurrent property taxes is much lower in Cambodia and Vietnam.
Similarly, in Cambodia, 80 percent of the revenues from taxes on property is derived from transfer taxes on immovable property. Revenues from recurrent property taxes (the tax on immovable property and tax on unused land) were around 0.12 percent of the country’s GDP in 2017.
The ADB recommended that any strategy for achieving sustainable increased revenues from property tax reform must be carefully talored to individual country’s particular circumstances and it is imperative that reforms be applied gradually to avoid sudden impacts, particularly on the most vulnerable of taxpayers. Allowance must also be made for compensating measures that may be needed.