A two-year income tax exemption is being offered to small and medium-sized enterprises that register with the Ministry of Economy and Finance before the end of 2018.
According to a sub-decree published yesterday, the decision to offer a tax exemption for SMEs that are willing to register, and thus fulfill their tax obligation, is to make the tax-paying environment transparent and fair.
The exemption is offered for two years to help encourage SMEs to register and help those SMEs increase production at a reduced cost.
The move will encourage unregistered SMEs to register and it will attract overseas investors to come and run SMEs, according to Te Taing Por, the president of the Federation of Associations for Small and Medium Enterprises of Cambodia.
“It is really important because the federation proposed the government to ease or provide a tax exemption to SMEs, to get those who haven’t registered to register at the ministry,” he said.
“It also attracts foreign investors to come to the country because Cambodia has potential in enriching raw materials and the government offers income tax exemption.”
Laim Kim Leng, the director general of the Industry Ministry’s SMEs and handicrafts department, said it will provide a chance for SMEs to consult with and get knowledge and technical assistance from the ministry.
“The sub-decree was made because so far some SMEs have not understood the registration process. The decision to provide an exemption will fill in the gap and encourage them to officially register,” he said.
“Upon registration, we can help support SMEs and also promote them better because they are one of the main backbones of national economic growth.
“When income tax is exempted, it will make produced goods from SMEs cheaper, so it will increase the capacity of SMEs in Cambodia.”
There are a half million SMEs in Cambodia, but only 60 percent are registered based on their sectors – agriculture, industry, trade and service – according to Mr. Kim Leng.
The industry sector alone has about 150,000 SMEs, with about 80 percent registered.
Mr. Taing Por agreed with the sentiments of Mr. Kim Leng, saying that many SMEs remain unregistered because they think strict requirements will befall them once they are registered.
“We have been encouraging them. We want there to be some incentives or exemptions offered to them when they get registered,” Mr. Taing Por said.
“If we want them to register and then we get strict, they won’t come, but if they see an advantage to registering, they will come.”
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