Despite reforms introduced last year allowing businesses to register online, businesses are claiming they have been asked to follow some of the old procedures or face a penalty.
The government introduced its Single Portal system in June. This was designed to integrate six ministries on one platform to help streamline the registration process and reduce bureaucratic roadblocks.
Businesses were said to be able to register with the General Department of Taxation (GDT), Ministry of Commerce (MoC) and the Ministry of Labour and Vocational Training (MLVT) simultaneously. It also granted them a value-added tax (VAT) certificate, patent tax certificate and tax registration identification card.
However, some sources who registered under the Single Portal system last year have said under condition of anonymity that they have been asked to visit the GDT so that they can submit paperwork that was thought to be obsolete.
They face a $500 fine and withdrawal of their VAT certificates if they fail to have the chairman’s or country representative’s photograph and fingerprint taken as well as complete forms that were once thought to be obsolete.
Anthony Galliano, group chief executive officer of Cambodian Investment Management, said he was familiar with the issue, adding that companies were “surprised” by the request.
“Despite successfully completing the online registration process, clients are now being asked to submit additional paperwork. Every client we registered through the online system is being asked to submit registration forms and have the chairman have their photograph and a fingerprint taken at their local branch office,” Galliano said.
He added that the development was a step backwards because the MoC and MLVT registration were completely online. However, the tax registration still requires further processing and requires a physical presence.
“The online business registration system was a milestone achievement for Cambodia and greatly increased the ease of doing business. It was a spectacular success for the Kingdom in terms of business and investment on the world stage,” said Galliano.
“Cambodian Investment Management has effectively registered many clients through the platform and found the system extremely efficient and easy to use and our clients were delighted with the experience that only took 14 days to register with three ministries, as opposed to two to six months previously.”
Galliano stressed that many of the online registrants were confused by the development and were foreign-owned, leaving them vulnerable to demands and sometimes even unable to comply with the request because they are currently overseas because of the pandemic.
The Ministry of Economy and Finance revised the rules and procedures for tax registration under Prakas 701 on Aug 14.
The prakas (directive) outlined that private limited companies, foreign company branches, representative offices and limited partnerships, public enterprises, state-owned enterprises and state joint ventures were able to use the e-registration website, allowing them to receive approval documents digitally.
Individuals conducting business in Cambodia, associations, nongovernmental organisations, embassies, consulates, government institutions, technical cooperation agencies of other countries and political parties were directed to follow the old procedure and submit Tax Registration Form 101, the prakas said.
Galliano said that Prakas 701 was “perhaps a signal that complete digitalisation of tax registration was in jeopardy”, but added that “there must be good reasons for the adjustment”, without specifying what they may be.
Registrants who are abroad would be subject to quarantine rules and the challenges of confirming flights, which would be inconvenient and expensive.