Logo of Phnom Penh Post newspaper Phnom Penh Post - Prolonged VAT exemptions to benefit farmers

Prolonged VAT exemptions to benefit farmers

Content image - Phnom Penh Post
The General Department of Customs and Excise of Cambodia (GDCE) has opted not to impose new value-added taxes (VAT) on select agricultural equipment in policies set to take effect on January 1. POST STAFF

Prolonged VAT exemptions to benefit farmers

As revenues have soared, the General Department of Customs and Excise of Cambodia (GDCE) has opted not to impose new value-added taxes (VAT) on select agricultural equipment in policies set to take effect on January 1, next year.

According to the GDCE’s announcement, signed by director-general Kun Nhem on October 13, the government will not levy VAT on motorised water pumps with a flow capacity up to 8,000 cubic metres per hour.

Larger types of industrial pumps are still subject to obligations and taxes according to the provisions in force, with exceptions granted by the GDCE for certain projects aimed at agricultural sector usage.

The GDCE defines VAT as a tax on goods or services supplied locally and levied on end users at a rate of 10 per cent in Cambodia.

Hun Lak, director of milled-rice exporter Mekong Oryza Trading Co Ltd, said placement of VAT under burden of the state on imported water pump machinery contributes to reducing farmers’ production costs.

But he pointed out that it does not quite make them as competitive as their counterparts in neighbouring countries.

“If the government optimises VAT exemptions, it will help lower production costs and make it easier to compete in milled-rice export markets.

“We know that our neighbours, Thailand and Vietnam, boast lower costs of rice production and processing than in Cambodia,” Lak said.

For Lun Yeng, secretary-general of the Cambodia Rice Federation (CRF), this type of tax exemption will benefit farmers because most use water pumps to irrigate rice fields.

“If importers do not have to pay VAT, they can sell at a cheaper price, which enables farmers to afford the equipment they need,” he said.

At an annual meeting in February this year, Kun Nhem said the GDCE collected more than $3.21 billion last year, an increase of 30 per cent over 2018.

He noted that revenue collected in major taxes categories saw remarkably high growth, with import duties up 30.7 per cent, special taxes up 33.6 per cent and VAT collections rising 28.8 per cent.

By type of goods, vehicles and machinery continued to be primary sources of tax receipts, accounting for 52.7 per cent of total revenue.

“Revenues collected last year were the highest in the last 20 years. This has occurred in a context where preferential tariffs, both in terms of investment incentives and for priority sectors, as well as the implementation of free trade agreements, are steadily increasing year by year,” he said.

MOST VIEWED

  • Ice cream, noodles flagged over carcinogen

    The General Department of Customs and Excise of Cambodia (GDCE) has identified three types of instant noodles and ice cream trademarks originating from Thailand, Vietnam and France that are suspected to contain ethylene oxide, which poses a cancer risk to consumers. The general department has

  • Angkor lifetime pass, special Siem Reap travel offers planned

    The Ministry of Tourism plans to introduce a convenient, single lifetime pass for foreign travellers to visit Angkor Archaeological Park and potentially other areas. The move is designed to stimulate tourism to the culturally rich province of Siem Reap as the start of the “Visit

  • Exclusive interview with Josep Borrell Fontelles, High Representative of the EU

    CAMBODIA is hosting the 55th ASEAN Foreign Ministers’ Meeting (AMM) and Related Meetings this week with top officials from the US, China, and Russia and other countries in the region slated to attend and to meet with face-to-face with their counterparts on the sidelines. In

  • Rise in Thai air routes to Siem Reap fuels travel hopes

    Local tourism industry players are eager for regional airline Bangkok Airways Pcl’s resumption of direct flight services between the Thai capital and Siem Reap town on August 1 – home of Cambodia’s awe-inspiring Angkor Archaeological Park – which is expected to boost the growth rate of

  • ASEAN Foreign Ministers’ meet commences, Taiwan issue possibly on table

    The 55th ASEAN Foreign Ministers’ Meeting (AMM) and related meetings hosted by Cambodia kicks off in Phnom Penh on August 3, with progress, challenges, and the way forward for the ASEAN Community-building on the table. Issues on Taiwan, sparked by the visit of US House Speaker

  • Recap of this year’s ASEAN FM meet and look ahead

    This year’s edition of the ASEAN Foreign Ministers’ Meeting (AMM) hosted by Cambodia comes against the backdrop of heightened global tensions and increasing rivalry between major powers that have been compared to the animosity of the Cold War era. The following is The Post’