The General Department of Taxation (GDT) has announced that it will be printing paper copies of the Property Tax Invoice to be distributed to all property owners in a manner similar to that of utility bills, which it hopes will eliminate most of the loopholes enabling tax evasion.
GDT director-general Kong Vibol unveiled the new distribution strategy at a ceremony on April 26 alongside Phnom Penh municipal governor Khuong Sreng.
Since the modernisation of the tax system in 2012, tax collection by the GDT has “increased steadily” and even exceeded the goals set by the annual laws on Financial Management – notably, even in 2021, the peak of the Covid-19 epidemic, Vibol said.
He noted that the increase in tax revenue was “not accidental”, but rather was the result of targeted introduction of “active and proactive” tax collection processes, key of which included the implementation of IT systems. He said such systems play a crucial role in the effective management of tax collection, especially by making it easier for taxpayers to declare and pay taxes and, consequently, harder to evade them.
At the ceremony, Vibol requested from Sreng the assistance of the Phnom Penh Municipal Administration, which he heads, in the distribution of paper invoices to property owners.
Vibol said a number of issues had plagued the department in the collection of this category of tax, such as taxpayers providing addresses that do not appear on maps, the duplication of street and house numbers and outdated addresses as a result of the redrawing of the Kandal-Phnom Penh border.
“We are advising units under the GDT to prepare Property Tax Invoices and distribute them to all property owners, just like water and electricity bills,” he said.
Municipal governor Sreng expressed willingness to assist in administering what he called “public administration and financial reform”.
“I would like to advise the administration under Phnom Penh Municipal Hall, including district administrations and professional officers, to continue to support and cooperate fully with the GDT in its mission to collect tax,” he said.
Global Real Estate Association president Sam Soknoeun said that the GDT’s strategy of distributing annual property tax invoices helps the state control the flow of buying, selling and transfer of ownership, alongside being a source of increased tax revenue for the country.
“This [method of] distribution of real estate bills to property owners is very good” as it is standardised, making it difficult for them to claim ignorance, he said. “In the past, some property owners understood this tax obligation, while some said they did not care, and some did not even know it at all.”
“Currently, some property owners believe that the payment of property tax only occurs when there is a transaction … or transfer of ownership,” he added.
However, Soknoeun urged the GDT to explain and disseminate more widely the method through which it calculates annual property tax values, saying that the lack of clarity as well as procedural inefficiency on the part of officials has led to instances of individuals inadvertently filing their taxes improperly or late, and being fined as a result.
“Some property owners are really willing to pay taxes, but the attitude of officials and tax procedures … has left property owners misinformed and not paying taxes at all,” he said.
Meas Vichet, a homeowner in Phnom Penh’s Sen Sok district, said that the value of his property meant that it was not subject to taxation. Nonetheless, he always takes his documents to the district tax office every year for checks as he fears potential penalties otherwise.
“Paying taxes is mandatory, so I always bring my property documents to the district tax office every August and September, so as not to be penalised,” he said.
In 2021, the tax revenue collected by the GDT was $2.782 billion, or 124.02 per cent of the requirement as stipulated in the Law on Financial Management for the year.