Thailand
Cambodia: Tax delay offers market ‘more breathing room’
Property insiders have welcomed the General Department of Taxations (GDT) decision to delay the enactment of “prakas 346” (the 20 percent capital gains tax on individuals) until 2022 just two weeks after it was approved by the Prime Minister on Oct 9.
After its approval earlier this month, the industry had been preparing for the impact of a capital gains tax, noting an increase in listings and requests the property be sold before the Jan 1 implementation.
The industry has now said its delay will allow for a wider window to disperse immediate sales over the next 15 months adding that it is expecting some sellers to take their property off the market.
According to the GDT, the decision to delay that tax was to give enough time for taxpayers and the public to comprehensively understand its regulations as well as being prepared to implement them smoothly and effectively. The industry does not believe that the backflip will result in any uncertainty, stating that, if anything, the delay will bring more certainty to the market.
Senior Director of CBRE Cambodia James Hodge said while the industry had been expecting a capital gains tax for quite some time, its delay will allow for some more breathing room in an already downturned market.
“We had actually run a seminar about a month ago helping to advise investors on the possible impacts a capital gains tax would have on the market, so most in the industry were ready for it,” he said.
“However, it was the right decision by the GDT to delay the tax due to the current climate and welcome its implementation at a later date. We also believe the decision will bring more certainty to the market and allow our agents to disperse those immediate listings over the next 15 months,” he added.
Hodge said most in the industry believe that as a concept a capital gains tax is fair and will bring Cambodia in line with the majority of other taxation policies around the world.
He added that the 20 percent rate on profit was considered a reasonable level for international investors.
Founder and Managing Partner of Mekong Strategic Partners Stephen Higgins also welcomed the delay, adding that there were some questions on detailed policy measures that were still unanswered.
“The policy still had too many unanswered questions about how the tax will be implemented, particularly on non-land transactions. So it does make sense to use this extra year to get the details right,” he said.
The Cambodian government revised its target for year-on-year fiscal revenue growth to 0.3 percent of gross domestic product (GDP) this week, down from the planned 0.5 percent increases as outlined in the original Revenue Mobilisation Strategy 2019-2023.
Source: https://www.khmertimeskh.com/50777698/tax-delay-offers-market-more-breathing-room/