Japan Balks At VAT Levy On Bridge

Cambodia has imposed a 10 percent value-added tax on a $55 million Mekong River bridge project, potentially jeopardizing its continued construction, a leading Japanese newspaper reported Tuesday.

Japan has filed a complaint with the Cambodian government, arguing that the Japanese-funded project is financed by a grant and should not be taxed, reported Yomiuri Shimbun, Japan’s largest circulation newspaper.

“A document exchanged by the two governments clearly states that the construction of the bridge would not be subject to taxation,” the newspaper quoted Japanese Ambassador Masaki Saito as saying.

Construction on the 1,360-meter bridge across the Mekong in Kompong Cham province started in November after an 18- month delay caused by political instability.

The newspaper cited sources as saying that the Finance Min­istry had requested the payment.

Reports that the garment in­dustry might be exempted from the tax caused concern among donors last week. At a meeting with international donors, Fi­nance Minister Keat Chhon proclaimed that “everyone” would be paying the tax. “Diplomats, you will pay VAT too,” he said.

 

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