Ministry of Economy and Finance Changes Tax Rules for Commercial Gambling Business

Cambodia (January 9, 2023) — The Ministry of Economy and Finance (MEF) has started implementing the revenue-based taxation rules and procedures on commercial gambling businesses on the self-declaration regime since December 30, 2022, after the lump sum-based taxation method had been practiced for several decades, local media outlets reported a senior official of the ministry said yesterday.

Commercial gambling businesses are also required to follow the International Financial Reporting Standards (IFRS)—a set of accounting standards that govern how particular types of transactions and events should be reported in financial statements, which were developed and maintained by the International Accounting Standards Board (IASB), the official said.

Mey Vann, secretary of state of MEF, told the ‘Khmer Times’ yesterday that the new rules and procedures of taxation would enable the government to improve transparency and accountability in tax collection from the commercial gambling industry in Cambodia. They would also help the government in the implementation of anti-money laundering and anti-corruption measures.

“This means that there would no longer be cases of hiding cash to be paid to the authority even by the casino owners and tax officials as the rules and procedures determine check-and-balance practices for the balanced power among operators, regulators, inspectors and other relevant stakeholders involved in the implementation of the new proclamation,” said Vann.

“Check-and-balance practices mean all relevant parties are required to check or examine one another. None of them can exploit anything in the gambling business operations, while the casino party would not be able to cheat the gamblers and the gamblers would not be able to cheat the casino. Gamblers at casinos can file complaints if they have sufficient evidence,” he said.

The new rules and procedures would allow people to enjoy commercial gambling in casinos that are considered as entertainment centers, according to Vann, who is also a member of the General Secretariat of the Commercial Gambling Management Commission of Cambodia (CGMC) of MEF. However, he said that after the five-year transition period from 2023 onward, the government would require casinos to change the word on the signboard to commercial gambling.

“We cannot ask them to change immediately and so we have to give them some time and they are related to many factors such as their internal agreements and other legal aspects,” said Vann, adding that the lump sum-based taxation method had been practiced since the 1990s before the proclamation on the rules and procedures for tax obligation implementation for commercial gambling businesses was issued on December 30, 2022.

Khun Darith, the Managing Partner of audit, accounting, and tax solutions at accountancy and auditing firm K Professional Accountants (KPA), told Khmer Times yesterday that the new guidelines and procedures to implement tax obligations to the commercial gambling industry are divided into two folds that would enable GDT to properly regulate the gambling industry which strengthens the tax regime and to collect tax timely — monthly and annually — from the industry.

Khun Darith also said the commercial gambling entities will have profit tax obligations of 20 percent and other withholding tax obligations and this is yet another indicator that GDT will be expecting to collect more taxes from the commercial gambling industry.

The tax income that is collected from commercial gambling will significantly increase as the tax procedures have outlined additional tax on Value Added Tax (VAT) and 1 percent prepayment of income tax.

“To me, this is a very good step for Cambodia to have such guidelines and procedures to properly regulate the industry. It is a very excellent step to have clear procedures and mechanisms for this gambling industry to implement their tax obligations, as there were no clear procedures before,” said Darith, adding that there are more than 100 licensed casinos.

The accounting and tax expert said tax the new guidelines instructed all gambling businesses to register with GDT, declare all gambling income and other incomes from non-gambling activities which will contribute to additional tax incomes, maintain proper accounting records and retain the supporting documents and records for 10 years. “This is very good from a good governance perspective to ensure transparency and accountability,” he said.