IMF Expert Says Tax-GDP Ratio Needs to Rise

The International Monetary Fund’s Asia and Pacific Department Director Anoop Singh said at a news conference Sunday in Washington that the ratio of tax revenue to GDP in Cambodia remains too low, lagging behind other Southeast Asian countries.

Mr Singh, who was attending the annual meeting of the IMF’s World Bank Group–videotapes of which were posted online–praised the government’s commitment to tax reform, but said Cambodia’s tax ratio remains between 5 and 7 percent points beneath countries in similar stages of development.

“As we look at Cambodia relative to other low-income countries in Asia, it remains the case that important steps are needed in Cambodia’s case to raise the tax ratio,” said Mr Singh.

Eric Vanderbruggen, a tax consultant who works with both the World Bank and the government, said yesterday that the General Department of Taxation was struggling to find the resources to apply its existing tax laws.

“There are probably some issues surrounding both the establishment of laws and regulation, and applying those laws,” Mr Vanderbruggen said. “But it is easier to write laws then to master the resources to apply those laws in the ways they were meant to be applied,” he added.

According to Mr Vanderbruggen, the GDT is making an effort to broaden the tax base in order to place more professionals within the framework of the tax code, which he said would best encourage investment when it becomes more coherent to the business community.

“What would be helpful is to know the rules so that we can really compete,” said Janet Lueckenhausen, executive director of the International Business Chamber of Cambodia. “We want to know what the taxes and fees which are legitimate will be, before we make business decisions,” she said.

Saying businesses would not resent the widening of the tax base if collection was more transparently regulated, Ms Lueckenhausen added that she believed corruption would continue to undermine any tax policy.

“It is an old truism that not everybody pays taxes, so our hope is that the playing field can be leveled somewhat,” she said.

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