PM says no tax for biz with annual income below KHR 250M

Micro enterprises with an annual turnover of less than 250 million riels will not be taxed, Prime Minister Hun Manet assured on Thursday evening during his special statement on the ‘One-Year Achievements of the Royal Government of the 7th Legislature of the National Assembly’ that was broadcast live.

The owners of micro-businesses, whose revenue falls in this category, do not need to register for tax declaration purposes as well.

The Prime Minister’s announcement came amid concerns regarding a recent prakas issued by the Ministry of Economy and Finance (MEF) containing guidelines and procedures for implementing the sub-decree aimed at encouraging individuals and businesses operating in the informal economy to comply with tax obligations in the wake of concerns.

The Prime Minister has since asked MEF to repeal the prakas and take steps to conduct wider discussions on the concerns.

Mr Hun Manet explained that the proclamation of MEF was well-intentioned, seeking all informal economy operators to voluntarily register to receive the benefits provided by the government such as for skills training and capacity building without any tax obligations.

However, when this prakas of MEF was announced, many informal economic business owners, especially micro business owners, got confused, worried and afraid that registration on the tax register would lead to tax collection or tax payments from the very next day.

According to the Prime Minister, in order not to cause confusion, he asked MEF to repeal this prakas and discuss with all stakeholders the measures to enable traders to advance their businesses in the informal economy.

He said that identifying those working in the informal economy would help the government implement its welfare programme in a targeted way and also more effectively.

It may be noted that micro-enterprises are businesses with sole proprietorships or joint ventures with an annual turnover of less than 250 million riels or assets under 200 million riels or with 1 to 4 workers.

Small enterprises are individual enterprises or joint ventures having an annual revenue from 250 million riels to one billion riels or having annual business assets from 200 million riels to one billion riels for the agriculture sector, service (accommodation and food) sector and commercial (wholesale, retail and repair) sector.

Small enterprises are also those having an annual turnover from 250 million riels to 1,600 million riels or have annual business assets from 200 million riels to two billion riels for industry (handicraft) or having a turnover for three repeated months ending in the current calendar year from 60 million riels and up, or expecting to get income for three consecutive months ahead from 60 million riels, or participating in bidding, consulting or surveying the supply of goods or services using the state budget, including taxes, or enterprises employing five to 49 workers.

A medium enterprise is an individual or enterprise with an annual income of more than one billion to four billion riels or having annual business assets of more than one billion to two billion riels for agriculture sector or with an annual income of more than one billion to six billion riels or annual business assets more than one billion to two billion riels for service sector (accommodation and food) and commercial enterprises (wholesale, retail and repair) having an annual income of more than 1.6 billion riels to 8 billion riels or having annual business assets of more than two billion riels to four billion riels for industry sector (handicraft), or an enterprise with 50 to 199 workers.

According to the MEF, the purpose of the sub-decree was to integrate informal economic activities into the formal tax system and ensure proper taxation and economic regulation.

Source: Khmer Time