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Property tax launch is set for launch in 2010


Buyers of constructions worth more than $25,000 are set to pay new levy if Ministry schedule goes ahead as planned

THE government is set to launch a new property tax by the end of this year, officials at the Ministry of Economy and Finance said Monday, in a move which has reportedly sparked protest in Cambodia’s capital.

Under the Finance for Management Law, passed in November, purchasers of constructions worth more than 100 million riels (around US$25,000) will be required to pay an annual tax worth 0.1 percent of property value.

“We are preparing a prakas to establish a committee to evaluate property and we will start implementing tax collection in the end of this year, as the National Assembly requires,” Norng Piseth, chief of the Real Estate Division at the Ministry of Economy and Finance, said Monday.

“It is very important for increasing national income,” he added.

Although the new levy is not expected to raise large amounts of additional funds, as Minister of Finance Keat Chhon has estimated tax revenue would be between $3 million and $9 million, the government has voiced its ambition to improve tax administration.

Hang Chuon Naron, secretary of state for the Finance Ministry, said at a meeting of government donors held earlier this month that in 2010 the government aims to improve customs and tax administration, to meet the increased expenditure of sub-national administration and introduce a tax on all land assets.

This view was reiterated by Keat Chhon at a discussion of real estate law late last year.

“We want to establish a tax culture which allows us to collect tax directly in the future,” he said.

About 180,000 houses that are under municipal and provincial administration would be covered under the new property tax, he added.

Some commentators are considering whether it is the right time for a new levy.

Sung Bonna, president and CEO of Bonna Realty Group and president of National Valuers’ Association of Cambodia, said Monday: “In my point of view, I think that government [is acting] too early to collect tax on property while country is facing the [impact of the] global economic crisis.”

He believes that local investment may be affected “a little bit” by the fee, but it is the “duty for everyone to comply”.

But property developers, who are set to pass on the tax to vendors, did not oppose the move.

Kheng Ser, assistant to World City’s Duk Kon Kim, the developer behind Camko City project development, said Monday: “I think that those who are obliged to pay tax are buyers.

“But if the law required to pay – we must to pay to the government. This is a duty.”

However, according to the Deum Ampil News, 100 people representing 490 families living at the Borey Tang Kasang housing development in Phnom Penh’s Dangkor district protested against the tax on Friday. The report said that developer Borey Tang Kasang confirmed to protesters that they must pay the tax.

Source: Phnompenh Post http://www.phnompenhpost.com/index.php/2010062940129/Business/property-tax-launch-is-set-for-launch-in-2010.html

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