Cambodia’s income tax revenue is $250 million a month due to the growth of the private sector, which has led to a reduction in custom duty.
Prime Minister Hun Sen made the statement at a graduation ceremony at Vanda Institute, adding that when income tax increases, it often causes custom tax revenue to decrease.
“When a country is developing, it makes the private sector grow so it causes tax increases. Because of the Regional Comprehensive Economic Partnership (RCEP), Free Trade Agreement with China and the Republic of Korea, the custom tax will drop while income tax will increase,” Hun Sen said.
He added that private sector growth helps boost the country's economy through employment and taxation. "The stronger the private sector, the more taxes are paid. The more money we earn from taxes, the more we can invest in roads, canals, schools, hospitals, and raising the salaries of our civil servants," he said.
Ky Sereyvath, Economic Expert of the Royal Academy of Cambodia, said tax incomes are an additional form of revenue. The increase in tax income stems from the growth of production in local areas, causing economic movements.
“It is not a problem for the economy when custom tax decreases, internal taxes will automatically increase as domestic production grows so it will create more work and push economic growth,” Sereyvath told Kiripost.
He added that the development of the private sector will create more domestic movement and the government will collect more taxes.
In the first nine months of this year, Cambodia’s total tax income collection hit 95 percent, the equivalent to nearly $3 billion, according to the Prime Minister.
On October 28, Prime Minister Hun Sen signed a sub decree that lays out income tax for 2023 as part of a strengthened nationwide tax collection drive and to ensure a level playing field for businesses.