Property tax questions asked

THURSDAY, 04 AUGUST 2011 15:00

LIAM BARNES

CAMBODIA’S property tax is to come into effect next month, though experts say the levy is not widely understood and may be too early.

The property tax will initially focus on the capital’s properties, comprising an annual payment calculated of 0.1 percent of the value of the property as estimated by an evaluation committee, according to previous prakas.

Phnom Penh’s properties have been valuated by a committee formed by the Minister of Economy and Finance, with Bonna Realty Group assisting the process.

However, Bonna Realty Group CEO and President said he believes public knowledge of the property tax is still fairly restricted.

“I feel that many people don’t understand how the law will work, even I don’t understand certain elements,” he said.

“A workshop should be held between the private and public sector, in order to extend public knowledge”

Although properties worth less than US$25,000 are exempt the tax, it still could cause issues for Cambodians in the lower wage brackets, he said.

“It is too early for the government to collect property tax. They should have announced the law a year in advance. The public are not prepared for this situation.”

Bonna Realty Group provided the government with its research and expertise prior to evaluation process, though the real estate company had no direct influence on the final decisions, Bonna added.

Insiders say previous efforts of valuating property for a land transfer tax had been problematic, and highlighted the process as crucial for the property tax’s success.

“There was a lack of transparency during the implementation of the land transfer tax and many properties were highly-overvalued,” said Matthew Rendall, Managing Partner at law firm Sciaroni & Associates. He added that the legitimacy of the valuations could be questioned if a similar committee had been hired to evaluate the zones.

“However, if the tax is successfully implemented, it will introduce a positive tax culture to the Kingdom, which in time will bode well for the economy on the whole.”

With the tax expected to boost federal coffers by an estimated US$4 million according to estimated from the Ministry of Economy and Finance.

Cambodia Property Limited Managing Director Cheng Kheng said he hopes the money will be invested back into the Kingdom.

“It would be great to see the income from the tax used in the right way to develop our country’s infrastructure, such as roads, schools, hospitals and more.”

The Ministry of Economy and Finance’s Deputy Director of Taxation Oum Chan confirmed that the budget will go to the National Treasury.

“We do take the budget to invest, but to spend on the development of the country.”

If the evaluation of certain properties is criticised, the committee of property evaluation will reanalyse the decision, he added.

“We don’t expect the evaluation of every property to be 100 percent correct, they are based research and housing market prices.” ADDITIONAL REPORTING BY CHAKRIYA KHIEV AND SOEUN SAY


Please link to original source: http://www.phnompenhpost.com/index.php/2011080450860/Special-Supplement/property-tax-questions-asked.html

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