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Tax breaks to boost securities sector

Chhut Bunthoeun / Khmer Times Share:
Six more companies are expected to float on the local bourse soon. KT/Siv Channa

The Ministry of Economy and Finance issued an announcement on the implementation of guidelines on withholding tax for investors in the securities sector to promote the development of stocks in the Kingdom.

The ministry issued the directive early this month, noting that local investors get a 6 percent tax break and non-locals get 14 percent in addition to existing laws on taxation.

Public investors will get a 50 percent deduction, allowing them to withhold tax on interest and/or dividends derived from holding and buying or selling government securities, equity and debt securities for a period of three years from January 2019 to December 31, 2021, it stated.

This latter is based on the Sub-decree on Tax Incentive for Securities Sector dated on Jan 4, 2019. The sub-decree also established exemptions for corporate tax and value-added taxes, among other tariffs, for companies that launch an initial public offering (IPO) at the Cambodia Securities Exchange (CSX).

“The new prakas [directive] gives clear guidelines for listed companies and investors regarding withholding taxes.

On the investor side, it is clear how much tax incentive a person will get from an investment in this securities sector and there will be more investors intending to invest in and boost the bond market,” Jong Weon Ha, a market strategist and chief operating officer at the CSX, told Khmer Times.

According to him, so far there are 11 securities-listed companies, of which five are share-based and six are bond-listed, with a combined fund raising of about $223 million from the capital market.

“We expect to have six more companies to list equities and another three to list bonds,” he added.

ACLEDA Bank is set to become the first bank to float on the country’s local bourse.

“In these last few weeks, our market seems to have experienced better trading activities when compared with the first quarter of 2020 and I hope after ACLEDA Bank lists on the CSX, it will bring more market liquidity and more investor attention. At the same it is a good example for other financial institutions to consider as a diversification of funding sources via the securities market,” he said.

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