The Cambodian government had decided that the most pro-active way to encourage businesses and companies to register and be in legal compliance is to give those companies who register before December 2018 a two-year break on their taxes.
Speaking at a recent forum on micro, small and medium-sized enterprises (MSME) and technology startups, Cham Prasidh, the Minister of Industry and Handicraft, announced a variety of incentives for MSMEs that register with the ministry before the end of this year. Incentives for companies include government subsidies of market research for companies as well training program for their management staff and regular employees.
It is estimated that Cambodia has more than 510,000 MSMEs, but only 20,000 are registered with government, which means more than 95% of businesses are unregistered.
According to Minister Prasidh, “Our strategy is to push them to register their businesses. If they do, then we can help them in all aspects of running their companies. We will support companies with tax incentives, as well as by sharing market information and coaching them in business strategies and the use of technology. If they do not register, we cannot support them as they are operating outside the law.”
Chan Narith, Deputy Director General of the General Department of Public Finance Policy at the Ministry of Economy and Finance, said they are working on a number of strategies and initiatives to boost performance in the MSME sector.
Measures under consideration include allowing business owners to carry out the business registration and the taxpayer registration simultaneously through one government portal. The ministry is also considering partnering up with the private sector to offer training courses for skills in high demand.
Other measures include the establishment of an entrepreneur center that will help Cambodian startups to raise their competitive level. Other potential incentives the government is considering include a two-year exemption on taxes for companies that employ large numbers of people, purchase large quantities of raw materials or create value for the economy, as well as businesses that digitize their accounting systems.
Echoing other government spokespeople, Ms. Bun Neary, Deputy Director General of the General Department of Taxation said, “Enterprises are encouraged to register their business as soon as possible. If they register before December 31, we will give them a two-year tax revenue break, even if they have been operating for many years.”
Ms. Neary said that the government has avoided increasing taxes on businesses and that people that earn less than $250 do not have to pay taxes on their salaries. “This is all part of a new strategy to boost the sector and help businesses get off the ground. The Ministry of Industry and Handicrafts aims to register 70 to 90 percent of MSME’s by 2023.”