Thailand
Cambodia: Experts speak on how Law on Investment benefits investors
The sub-decree that Prime Minister Hun Sen signed Monday for the complete implementation of Law on Investment will provide bounteous incentives and options to local and foreign investors compared to the previous offers, said experts.
According to experts, the government has offered two options to investors for qualified investment projects or QIPs, which would be very favourable to motivate investors in addition to Value Added Tax (VAT) for inputs for exports, domestic supplies and imports would all be under the government’s responsibility that investors did not get before.
Speaking to Khmer Times yesterday, Khun Darith, President of Kampuchea Institute of Certified Public Accountants and Auditors (KICPAA), said that the previous rules did not allow investors to get options of incentives on income tax that had been set by the Council for the Development of Cambodia (CDC) and/or the General Department of Taxation (GDT).
“Based on the new sub-decree, investors are eligible to choose the first option that focuses on the income side for incentives on income tax or the second option that focuses on their capital expenditures. I think these two options would be much more favourable for investors,” said Darith, adding, previously VAT inputs were exempted for imported construction materials.
“But now, the tax exemption is also provided to investors for importing or domestically purchasing raw materials, which means this tax will be the burden of the government or it means the tax would be zero. So, investors would no longer need to pay this tax,” said Darith, adding that the previous rules required investors to pay 10 percent VAT on these materials.
Darith said that both the sub-decree and the new Law on Investment together will help boost Cambodia’s economy, especially through attracting more FDI—foreign direct investment—from other countries such as China, Malaysia and Singapore, while local investors would gain more benefits in terms of tax incentives, which enables Cambodia to further boost exports.
“Another big change is that previously only exporters were not required to pay the value-added tax, but now even producers to supply the domestic market are also exempted from this tax in addition to other tax incentives” said Darith, adding that the new principles offer tax incentives based on the three QIP project clusters that investors proposed to the government.
Article 50 of the sub-decree stipulates that qualified investment projects on new automobile assembly to supply the domestic markets are incentivised by reducing 50 percent of customs tax, special duties and VAT if their assembly parts are finished goods with domestically-supplied components of at least three percent and fulfill two of the three requirements.
The three requirements include using at least 400 assembly parts per unit of the automobile, investment capital from $5 million up and employing at least 150 workers, according to the sub-decree obtained by Khmer Times on Tuesday, adding that the reduction is offered up to 90 percent if investors in the category are able to fulfill other requirements set in the sub-decree.
Earlier, Lim Heng, Vice-President of the Cambodia Chamber of Commerce (CCC) told this newspaper that the sub-decree would enable all stakeholders to fully implement the new Law on Investment.
“We have been expectantly waiting for the sub-decree as the implementation of the new investment law even though it has been already put in place as its implementation has faced controversies in terms of taxation, customs and other stuff since promulgation. So, there must be this to be attached with the law for the effective implementation,” said Heng.
Heng pointed out that the new Law on Investment would enable provinces to attract more investments as it decentralises the authority from the national to municipal-provincial levels—municipal-provincial sub-investment committee—to approve investment projects worth $5 million or less and investors to get more incentives and care-taking while running projects.
Source: https://www.khmertimeskh.com/501316555/experts-speak-on-how-law-on-investment-benefits-investors/