Minister of National Assembly and Senate Relations and Inspection Men Sam An said Friday that although her ministry has discovered that some 500 companies owe the government $125 million in back taxes, her ministry has no power to take further action.
The ministry estimates that 497 companies in Cambodia owe the government $51 million in profit tax and $32 million in value-added tax accrued up to the end of 2004 and $42 million in interest on the unpaid taxes, according to an Inspection Ministry report obtained on Tuesday.
The report also found that in 2003, of the 5,196 companies that were required to pay tax, only 69 percent or 3,439 firms actually declared tax and in 2004, of the 6,072 companies then owing tax, only 67 percent or 3,941 companies declared their returns.
“My ministry has no right to force these companies and enterprises to pay money to the national treasury,” Men Sam An said, adding that the information on the 497 firms has been forwarded to the Finance Ministry to act upon.
Men Sam An’s report also notes that because of a provision in the Law on Taxation, her ministry cannot publicly name the companies involved.
But the losses discovered by the Inspection Ministry may be far less than is actually being lost in tax revenue to the government.
A new survey of 1,200 businesses conducted by the Economic Institute of Cambodia estimates that the government may be losing up to $400 million in tax revenue per year due to corruption.
CPP lawmaker and National Assembly Banking and Finance Commission Chairman Cheam Yeap said he has urged the Finance Ministry to step up its efforts to collect back taxes.
He said the Finance Ministry will now issue warning letters to the 497 firms, and follow up the warnings with the freezing of bank accounts and then court action.
Telecommunications and garment factories are among those that owe tax, Cheam Yeap said.
