The Ministry of Finance has finished drafting its accounting law, paving the way for increased tax revenue and tighter budget management of both the public and private sector.
The draft law, which sets procedures for tax collection and auditing, has been sent to the Council of Ministers for review, Finance Minister Keat Chhon said.
“The government has a policy to sustain economic growth,” Keat Chhon said. “It is still looking into the possibility of broadening the tax base in order to bring in more revenue to the state coffers, and thus for public investment and social development.”
The government comes under fire every year for spending too much money on defense and security, while not devoting enough to health and education.
Tax collection until now has been difficult. Some larger businesses are taxed on exports or imports, but smuggling is still common, and many Cambodians work in the informal, nontaxable sector.
The law, which must be reviewed by the council, then passed on to the National Assembly for debate, will help generate revenue to pour into health and education, Keat Chhon said.
The “Cambodian Accounting Standard,” as it is called, will also improve the investment environment, decreasing the cost of capital investment and promoting the efficiency of the markets, Keat Chhon said.
It may take more than this law, however, for accounting in Cambodia to reach international standards. Many accountants remain undertrained, and there is still widespread distrust of accountants, participants at a conference on accounting said last week.
But the law, modeled after international standards, is a start, conferees said.
“We want [Cambodia] to use an accounting standard,” said Ngy Tayi, undersecretary of state for the Finance Ministry. “More than 100 countries are now practicing an international accounting standard.”
High standards will mean more trust in the accounting and auditing processes, making tax collection easier for the cash-strapped government, officials say.
The government admits it is facing low confidence in banking and accounting, and it needs accountants and auditors with good ethics in order to gain the trust of businesses and the public.
The law is expected to be passed sometime next year, Keat Chhon said. In addition, the Ministry of Finance is working to set up a national accounting council and a board to certify public accountants and auditors, he said.
