Tax rate cut for to­bacco, al­co­hol dis­trib­u­tors

The Phnom Penh Post - - BUSINESS - Kali Ko­to­ski

THE gov­ern­ment has of­fered lo­cal dis­trib­u­tors of cig­a­rettes and al­co­hol some slack by re­duc­ing the tax obli­ga­tion on sec­ondary dis­tri­bu­tion of their prod­ucts.

A prakas is­sued late on Tues­day by the Gen­eral Depart­ment of Tax­a­tion (GDT) re­vises the ap­pli­ca­tion of the pub­lic light­ing tax (PLT), a 3 per­cent tax that is ap­plied to the in­voices of both im­ported and lo­cally pro­duced to­bacco and al­co­hol prod­ucts and levied at the time of each in-coun­try sale. Un­der the re­vi­sion, pri­mary dis­trib­u­tors of these prod­ucts will con­tinue to pay PLT on the full value of these prod­ucts, while the tax base for cal­cu­lat­ing the PLT on sec­ondary dis­tri­bu­tion will be re­duced from 100 per­cent to 20 per­cent of the sell­ing price ex­clu­sive of VAT and PLT.

The prakas ap­plies to beer, wine and cer­tain al­co­holic spir­its, as well as cig­a­rettes and all types of elec­tronic cig­a­rettes – or e-cig­a­rettes – which have been banned by the gov­ern­ment since 2014.

Clint O’Con­nell, head of tax prac­tice for DFDL Cam­bo­dia, ex­plained that while im­porters and man­u­fac­tur­ers will not see their tax obli­ga­tions re­duced, the prakas will pro­vide a “lit­tle down­stream tax re­lief ” for dis­trib­u­tors.

“The ob­vi­ous ben­e­fit to the dis­trib­u­tors is that the amount of tax that they were pay­ing will de­crease,” he said. “This sav­ing will ei­ther be kept by the dis­trib­u­tor or passed on to the end con­sumer. If the sav­ings are passed onto the con­sumer it is good for pro­duc­ers as it may make their prod­ucts more com­pet­i­tive and in­crease sales.”

He added that the Cam­bo­dia Cham­ber of Com­merce has been lob­by­ing the GDT to re­duce the PLT ap­plied to dis­trib­u­tors since June, and the gov­ern­ment re­sponse ap­pears to have taken in pri­vate sec­tor con­cerns.

Alan Yeo, vice pres­i­dent of Cam­brew, which is half-owned by brew­ing gi­ant Carls­berg and op­er­ates a brew­ery in Si­hanoukville, said that as a man­u­fac­turer and pri­mary dis­trib­u­tor the re­duc­tion would have lit­tle ef­fect on the com­pany. How­ever, he said sup­ply chains could see some ben­e­fits in re­duc­ing the costs passed on to con­sumers.

“While we al­ways pay the 3 per­cent pub­lic light­ing tax, we are not clear on how sec­ondary dis­trib­u­tors in­voice their sales,” he said. “How­ever, with such a com­pet­i­tive beer market in the coun­try, any changes that lower tax­a­tion will have large im­pacts across the market and ben­e­fit con­sumers.”

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