Cambodia’s General Department of Taxation (GDT) collected $20.91 million in value-added tax (VAT) on e-commerce transactions in the first quarter of 2023.

This represents a 6.3 percent increase from the $1.26 billion collected in the same period in 2022. The GDT expects this growth to continue, as the digital economy, including e-commerce, is growing steadily in Cambodia, the report said.

The GDT collects a VAT of 10% on e-commerce transactions. Both resident and non-resident taxpayers are required to pay VAT, with resident taxpayers and non-resident required to register for VAT and file VAT returns on a monthly basis.

The report said there are 68 companies registered for VAT, including Meta, Google, Youtube, Tik Tok, and Netflix. These companies are all required to pay VAT on their e-commerce transactions.

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The GDT is committed to improving its collection of VAT from e-commerce transactions in order to ensure that it can collect the revenue that it needs to support the development of the e-commerce industry in Cambodia.

In fact, in the Industrial Revolution 4.0, the digital economy is growing steadily yearly, including e-commerce, and the General Department of Taxation expects this sector to continue to grow. It will boost tax revenue from e-commerce and maintain sustainable growth yearly.

Ngeth Sophat, founder of eCO, said that strongly supports the e-commerce industry paying taxes, as taxes are a major source of development for the country.

However, he added that it is unfair for e-commerce platforms to pay VAT tax at this stage. Instead, e-commerce platforms should pay income tax, as the overall market does not pay VAT tax, and this would make e-commerce platforms more expensive.

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He emphasized that major problems and challenges are that internet access is not stable in many communities, lack of trust among users, and need for more explanation and education about e-commerce.

This limits the market size for e-commerce startups, as many people in Cambodia are not familiar with e-commerce and may be hesitant to use a platform if they do not understand how it works, he said.

“Most e-commerce startups focus on showcasing their technology and features but neglect to train end-users on basic digital trends,” said Sophat.

seng.mengheng@kiripost.com