Tax incentives introduced to encourage informal economy

Tax incentives introduced to encourage informal economy

 

Under newly implemented regulations, the Royal Government of Cambodia (RGC) has offered various tax incentives for micro, small and medium-sized enterprises (MSMEs) currently operating in the informal economy to properly register their businesses with the Ministry of Commerce (MoC) and the General Department of Taxation (GDT).

The new regulations seeks to ease requirements of compliance for currently informal businesses nationwide, and ultimately initiate a consolidation of all informal enterprises into the legal economy in coming years.

According to Sub-Decree No. 113, which was enacted May 21, incentives will apply to MSMEs that voluntarily register for tax on enterprises in prescribed timeframes, offering a window of opportunity for such operations to engage with formal requirements while being exempt from most penalties, fees and tax obligations for extended periods.

The sub-decree specifies that the tax incentives will apply to business categories including wholesale, retail, repair, accommodation, food and beverage services, crafts and agriculture.

MSMEs involved in such businesses that have voluntarily registered for tax on their enterprises are entitled to several tax incentives, as follows.

Firstly, micro-enterprises that have voluntarily registered for tax between 2023 and 2028 will be exempted from tax any registration fees and information update fees.

Regarding small enterprises that voluntarily register for tax between 2023 and 2028, exemption from penalties and tax liabilities for non-compliance prior to registration is granted, as well as exemption from any tax registration fees and update fees.

Furthermore, micro-sized enterprises will be exempt from income tax and minimum taxes for two years after their initial formal registration.

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Reporter: James Whitehead

Publication date: 21 June 2024

Sources: Khmer Times

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