Tax issues in the garment sector persist as a complex challenge for investors, necessitating process simplification to preserve the industry’s appeal and boost exports, according to the Textile, Apparel, Footwear and Travel Goods Association (TAFTAC).
TAFTAC president Kong Sang said during the 2023 Tax Forum – co-organised by the association and the General Department of Taxation (GDT) – on December 6 that tax compliance is crucial for the investment sector in Cambodia’s private domain.
He noted the obligations of factories and enterprises to register for taxes, submit accurate and timely returns and adhere to the prescribed rates.
“In principle, the law is simple, but in practice, there are many factors contributing to the complexities of our compliance environment. According to a previous survey, some factory taxpayers and tax officers, both Cambodian and foreign, have limited knowledge and, in some instances, have not received comprehensive and timely law updates on relevant legal and tax issues. Sometimes, there is also negligence or lack of attention,” he stated.
He expressed hope that the forum provided a valuable opportunity for participants to acquire new knowledge and experience in taxation, particularly regarding issues pertinent to the country’s garment, footwear and travel products industry.
GDT director-general Kong Vibol acknowledged the inherent complexity of tax laws, which can be challenging for businesses and investors to comprehend.
He noted that in some developed countries, the situation is even more complicated than in Cambodia. This has led his institution to strive to consolidate laws and regulations, resulting in new legislature that is more comprehensible.
“I recognise the challenges faced by taxpayers in the garment and textile sector in filing tax documents. Over the past decade, the GDT has been committed to organising seminars, training and publications to enhance taxpayers’ understanding of their obligations,” he stated.
He emphasised the GDT’s aim for relevant parties to remit voluntarily and in accordance with regulations, stressing that the body does not wish to penalise anyone.
“[The] forum for the sector is intended to provide more insight … about compliance,” he said.
“We have always worked closely with the textile sector, which employs hundreds of thousands of Cambodians. In the past two years, we have introduced an online payment system and observed that many taxpayers have utilised this method,” he added.
Sang noted that despite numerous simplifications and modernisations in the registration and payment process, including the establishment of an online system in 2020, laws and regulations remain complicated. He urged authorities to intensify educational outreach.
TAFTAC is the Kingdom’s largest export-oriented group, comprising approximately 700 member factories and about 850,000 workers, as per the association.