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Cambodia: Gov’t suspends advance income tax for qualified textile enterprises
The Royal Government of Cambodia through the Ministry of Economy and Finance (MEF) on Saturday last week released a proclamation after it had been issued on January 3, 2023, to approve the suspension of 1 percent prepayment of income tax for enterprises within the apparel and textile industry of Cambodia.
However, the suspension would be provided to the apparel and textile enterprises that have been recognised as qualified investment projects (QIP) to ensure sustainability and protection for workers and the people who are positively affected by this industry and have reached the expiry date of exemption for income tax, according to the proclamation.
The proclamation pointed out that the QIP enterprises include those are operated to manufacture textiles, apparel, footwear, hanging bags, handbags and caps to export to the markets in the rest of the world and the suspension of the monthly income tax—1 percent— would be valid until 2025 with three terms and conditions set in the proclamation.
To receive the suspension, each of those enterprises is required firstly to maintain accounting records properly as per the regulations set by the applicable laws on taxation and accounting, secondly to declare-pay other taxes as per set schedules and thirdly to submit annual reports that are independently audited to Cambodian tax administration, according to the proclamation.
“This proclamation aims at suspending the prepayment of income tax of apparel and textile enterprises that receive the status as the qualified investment projects to ensure the sustainability and protection for workers and the people who have received the benefits from this industry,” said the proclamation signed by Aun Pornmoniroth, Minister of MEF on January 3, 2023.
Albert Tan, Vice President of Apparel, Footwear & Travel Goods Association in Cambodia (TAFTAC), told Khmer Times yesterday that the association had submitted a request to the government for consideration of the suspension before the previous suspension had expired, while the demand had gone down in the international markets due to the global economic uncertainties.
“This new suspension is very helpful for the industry because currently there is still a shortfall in orders from overseas buyers … I cannot quantify the size of benefits as it does not mean all members and non-members are qualified for the suspension and different companies have different export figures and so the income is different too,” said Albert, adding that TAFTAC has between 600 and 700 members.
Khun Darith, Managing Partner of audit, accounting and tax solutions at accountancy and auditing firm K Professional Accountants (KPA), told Khmer Times yesterday that this is a continuation of the suspension of 1 percent prepayment for QIPs which expired the tax incentives which includes apparel, garment, textile, footwear, gag and travel goods for exports.
Darith also said The suspension of 1 percent prepayment comes with conditions that enterprises must have full compliance with tax laws and accounting and auditing laws which enterprises need to maintain proper accounting records as per tax laws and accounting laws, timely and properly declare other taxes and submit the annual financial audit to the General Department of Taxation (GDT).
“This proclamation comes at the right time for economic uncertainties, which will allow enterprises to free up some of its cash flow to sustain the enterprises which secure jobs for citizen. I see [it] is a great move not only to support enterprises and workers but also to encourage enterprises to comply with relevant laws as well as maintain its accounting records,” said the accounting and tax expert.
Source: https://www.khmertimeskh.com/501216674/govt-suspends-advance-income-tax-for-qualified-textile-enterprises/