Due to the slower global economic recovery and conflicts between Russia and Ukraine, the government has issued guidelines aimed at maintaining the stability of the construction and real estate sector, considered a priority sector to support overall economic growth in Cambodia.
According to a statement from the Ministry of Economy and Finance, the government issued guidelines to support the development of the construction and real estate sectors.
It aims to ensure the stability of construction and real estate, which are considered critical to overall economic growth. Specifically, the guidelines seek to maintain long-term employment for employees and increase access to low-income people who can afford affordable housing.
It said that it will continue to postpone the package tax payment implementation until the end of 2024 for borey companies, which have been running house development projects with real estate business licenses given by real estate regulators and mortgages.
It added that house development projects without a real estate business license must register their projects to obtain a real estate business license and mortgage by the end of 2023 to receive continued package tax payments until the end of 2024.
"Increasing package tax payment period from 12 to 18 months for borey companies paying less than $1 million and from 24 to 36 months for borey companies paying more than $1 million,” it said.
Besides that, capital gains tax implementation for the real estate industry will be delayed until the end of 2024. Also, stamp duty exemption on the transfer of ownership or possession of all forms of the house in the form of a borey with a value of less than or equal to $70,000, will be extended until the end of 2024.
"Exemption from additional penalties for house development projects, but the owners must comply with statement no.563 on ‘Real Estate Development Business Management’, registering on July 10, 2020,” it said.
The government also requests that banks and financial institutions reorganize their loans in accordance with the institution's actual capabilities, based on the concept of volunteerism and agreement between the institution and borey enterprises.
Hong Vannak, an economic researcher at the Royal Academy of Cambodia, said that as borey companies, particularly those in the provinces, have been severely impacted by Covid-19 and the war between Russia and Ukraine, the government must protect investors from collapsing.
The guidelines are intended to protect investors from additional challenges, as these issues already reduce people's needs in buying a house, he added.
“Normally, companies must pay taxes from the time they purchase land until they begin building. However, since they cannot sell any houses during construction, they will face a personal issue that might cause them to collapse,” he said. “That’s why the government issued this guideline to prolong tax payments until 2024.”
He added that a tax payment extension does not mean that the company will be exempt from paying tax. However, the tax payment has been divided into parts to respond to the quality of house sales.
“The government reduces their [borey owners] burden, meaning that the government assists the investors in real estate by ensuring their house sales and avoiding a collapse that would harm the firm, employees, and customers,” he said.