The Council for the Development of Cambodia is finishing draft amendments to the revised investment law, which is expected to reach the National Assembly by the end of February.
“It’s on the way,” said CDC Director of Information Chea Vuthy. Amendments will be discusses in a series of meetings before they are completed and sent to the Council of Ministers and then the National Assembly.
Conflicts over proposed changes to the law have been discussed for at least a year, with the government caught between donor suggestions and the those of private investors.
Private investors will take a big hit on profit tax, which will likely rise from 9 percent to 20 percent under the new law, according to the documents from a Jan 15 meeting.
The new amendments will also likely include a 20 percent withholding tax on income.
Tax holidays—the periods of time granted to companies in which they pay no tax—will be changed. Bretton Sciaroni, who represented private investors in talks, said it has been difficult to qualify for tax holidays, but now they would be granted to companies on a sliding scale, depending on the type of business.
Manufacturing and light industries would receive the shortest tax holiday (three years) while some industries could receive as many as six years.
After the Jan 15 meeting “all sides have made concessions [and] agreements in principle,” and the government will move ahead with drafting changes to the 1994 law, said Sciaroni.
The old law was enticing to investors, who otherwise had to deal with weak infrastructure and other obstacles.
But in order to draw investors outside the garment industry, who can move from country to country with relative ease, the new law will make investor incentives more consistent.
The hope is to draw investors looking to stay for longer periods of time, recognizing that most industries have higher start-up costs than garment manufacturers.
The government is looking for $15 million in additional economic support from the IMF for technical assistance and other financial programs once the new law is passed, Sciaroni said.
The IMF and the World Bank were resistant to some changes in the law, but after a year of meetings and written protests from many Cambodian enterprises, they relented on some issues.