Gov’t Threatens Penalties for Unpaid Taxes

If companies do not pay taxes owed to the government by Nov 20, their property will be confiscated, bank accounts frozen, import-export operations halted and business licenses canceled, Finance Ministry officials warned Monday.

“Those companies have ig­nored paying taxes,” Finance Minister Keat Chhon wrote in a statement. “This is a big mistake.”

The Finance Ministry called on businesses to quickly declare their earnings and pay the 10 percent value added tax. Companies may also face fines of between 10 percent to 40 percent of their total revenue, plus 2 percent interest each month that they fail to act.

“It is a very important tax to help raise revenue,” Ngy Tayi, un­der­secretary of state at the Fi­nance Ministry, said of the VAT. “We still see that rich people who drive luxury cars costing thousands of dollars pay no tax to the government. Businessmen are millionaires, but they never pay taxes.”

Ngy Tayi did not name specific companies that do not pay taxes.

The government will not force small businesses to hire accounting firms, but they must comply with a proper accounting system so the government knows how much tax they should pay, Ngy Tayi said.

The government crackdown on tax collection comes as it tries to bridge a $55 million budget def­i­­cit. Ngy Tayi said officials will start collecting the annual traffic tax today.

The Finance Ministry also recently considered taxing holders of the prestigious title Okhna, given to those who donate more than $100,000 for the country’s development. The proposal was shelved after newspaper reports drew ire from several Okhnas.

In the first eight months of the year, the government collected

54 percent of its budgeted revenue. Revenue was particularly low from forestry, fishery, factory lease and civil aviation taxes, all of which brought in less than 36 percent of expected revenue.

Petroleum import taxes generated only 39 percent of their earmarked revenue through the first eight months. Last week, the Economic Institute of Cambodia called for the elimination of the gasoline tax, arguing that rampant corruption has resulted in decreasing gas tax revenues since 1994, even though the number of cars has increased sharply.

A joint report released recently by the World Bank and the Asian Development Bank said that the coun­try’s tax revenues are among the lowest in the world.

Keat Chhon said that revenue is down because of the anti-Thai riots and the effects of severe acute respiratory syndrome.

“Now we are recovering,” the finance minister said recently. “The key word to increasing revenue is enforcement.”


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