Tax cuts and exemptions will be extended to help companies and unemployed workers better weather the ongoing effects of the COVID-19 pandemic, according a statement issued last week by the government.
This includes the reduction of the withholding tax on foreign and domestic borrowing by banks and financial institutions.
The loan interest withholding tax for banks and financial institutions from foreign and domestic borrowings will be reduced from 15 percent to 5 percent in 2021.
In 2022 it will increase to 10 percent and be restored to its original level of 15 percent in 2023.
The interest withholding tax on existing loans will also be reduced to 10 percent for 2021. It will return to its originally mandated level in 2022.
Foreign creditors that currently take advantage of interest withholding tax incentives include those from countries that have signed the Double Taxation Exemption Agreement (DTA) with Cambodia and other countries.
The government has also decided to extend the tax exemption period for the tourism and civil aviation industries and related companies to provide relief to these heavily pandemic-struck sectors.
Tourism operators, including hotels, guesthouses and travel agencies will continue to qualify for tax exemptions until the end of March 2021.
During the tax suspension period, tourism-related businesses will not have to pay the social security fund’s work-related injury and medical insurance premiums for their workers and will also be able to renew the business licence at no expense next year.
The government has also decided to extend the minimum tax exemption period for civil aviation operators until the end of March 2021and committed to extending subsidies for unemployed workers in the garment and tourism sectors until the same date.
During the temporary suspension of production at the Kingdom’s garment factories, workers could receive a monthly subsidy of $70, of which $30 was paid by the factory. Unemployed workers in the tourism industry are eligible to receive a subsidy of $40 monthly.
It was also decided to further delay the implementation of the private sector pension system until June 30, 2021.
After this the government will conduct a review based on the prevailing social and economic conditions at that time.