Tax official defogs capital gains
AGENERAL Department of Taxation (GDT) official on February 22 listed some of the assets that would be exempt from capital gains tax once it comes into force in January 1, 2022 and shed light on some of the finer subtleties of the tax.
Capital gains tax will be levied on taxpayers’ gains from the sale, transfer or establishment of property rights, or the registration of ownership or possession rights, according to Prakas No 346, which was signed by minister Aun Pornmoniroth on April 1.
Individuals will be required to pay a 20 per cent capital gains tax rate on calculated profits from the sale of certain assets including land, buildings, stocks, bonds, licences, patents and currencies.
Speaking at a seminar on the upcoming capital gains tax, GDT deputy director Ken Sambath said property belonging to state institutions, foreign missions, international organisations and government technical cooperation agencies are exempt from the tax, according to a GDT press release.
The government decided to waive tax on capital gains made through the sale or transfer of agricultural land that remains in production and whose owner or operator resides in the same commune as the farmland, according to Sambath.
He said “principal residences” of taxpayers of at least five years before the sale or transfer are also exempt, and the exclusion applies only to the “principal residence” of spouses with different addresses.
Exemption also extends to immovable property sales and transfers among relatives as outlined in the regulation on stamp duty tax – between
siblings, parents and children, parentsin-law and children-in-law and grandparents-in-law and grandchildren-inlaw (but not between siblings-in-law), as well as assets sold or transferred for “public benefit” as stated in the Law on Expropriation, he added.
He asserted that the administration of capital gains tax will provide a level playing field among the legal entities liable for the tax, or taxation equity.
“It will ensure sustainable tax revenue growth in line with the public financial management reform programme and the 2019-2023 revenue mobilisation strategy,” Sambath said.
He said capital gains tax will also control and direct housing speculation, reinforce the stability of property prices and ensure affordable real estate for investors and the general public.
“In this sense, it’ll be able to attract more investors, create more jobs and income for the people, increasing [positive] spillover effects in the economic system,” he said.
GDT said in the release that capital gains declared and taxed as ordinary income will not be subject to capital gains tax, adding that the tax will not apply to assets sold for break-even or at a loss.
Taxpayers can choose one of the
“Determination Based Expense Deduction” or “Actual Expense Based Deduction” methods to pay the 20 per cent capital gains tax rate.
Anthony Galliano, group CEO of renowned accounting and auditing firm, Cambodia Investment Management, previously told The Post: “Based on the Actual Expense Based Deduction, the taxpayer can deduct the cost of acquisition and expenses holding and transferring the immovable property which qualify as deductible expenses.
“On this basis, if the costs are higher than the sale proceeds, there is no tax.
“The GDT has been very generous to investors in regards to the calculation of the capital gains tax. If an investor has made a substantial capital gain from holding an asset that cost a fraction of the sale proceeds, they can choose the Determination Based Expense Deduction option.
“The investor can deduct 80 per cent of sales proceeds as the cost and just pay the tax on only 20 per cent of the gain, rather than a true larger gain.
“On the other hand, the Actual Expense Bases Method is favourable in cases where the investor has a small gain or suffers an overall loss when considering the cost of the asset acquisition cost and inclusion of additional expenses, such as consulting, legal, registration, advertising and commission fees.
“This is more favourable for developers who can include most costs of the property development,” he said.
GDT in October said the government had decided to postpone the implementation of the capital gains tax from January 1, 2021 to January 1, 2022 due to Covid-19 concerns and to provide taxpayers more time to gain a better grasp of how capital gains tax works and what it implies for investments.
VIETNAM’S Ministry of Trade and Industry has decided to levy a temporary anti-dumping tax of 44.88 per cent on unrefined sugar and 33.88 per cent on refined sugar imported from Thailand.
The taxation on sugar cane imported from Thailand is an opportunity to revive the domestic sugar industry. This is also considered an important decision to help the sugar industry overcome a very difficult period.
This tax rate will be regularly reviewed to ensure a fair, competitive environment if there is a strong shift from importing refined and white sugar to importing raw sugar in order to avoid anti-dumping tax and anti-subsidy at a higher level.
The decision comes after the ministry in September initiated an anti-dumping and anti-subsidy investigation for imported sugar from Thailand on the basis of the documents requested by the Vietnam Sugar and Sugarcane Association (VSSA) and domestic sugar producers.
It later found that Thai businesses shipped nearly 1.3 million tonnes of subsidised sugar to Vietnam last year, an increase of 330.4 per cent compared to the previous year.
The sharp increase in import volume caused serious damage to Vietnam’s sugar industry, forcing plenty of sugar processing mills to halt operations and lay off workers.
According to the ministry, as many as 3,300 workers have lost their jobs and more than 93,000 farmers have been affected by the inefficient operation of sugar mills.
The ATIGA (ASEAN Free Area Agreement), took effect from January 1, last year, reducing the import tax on sugarcane from 80 per cent to five per cent on unprocessed sugar and white sugar.
This has led to a massive import of sugar. According to the VSSA, the total amount of sugar cane imported into Vietnam has increased rapidly, reaching approximately 1.5 million tonnes, double the amount of sugar produced domestically. Of the volume, a considerable amount is imported from Thailand.
Nguyen Van Loc, the association’s acting general secretary, said the drought affected sugarcane productivity, in June the Thai government had agreed to provide $317 million to the Thai sugar industry.
This funding is equivalent to about 1,419 baht ($47.24) per tonne of sugarcane, helping the Thai sugarcane price remain at a very competitive level. Thai sugar cane is massively imported into Vietnam, causing many difficulties for domestic sugar companies as well as for sugarcane farmers across the country.
Previously, the production capacity of domestic sugar mills was about
1.5-1.6 million tonnes, so far it has fallen to half.
Loc adds that before ATIGA integration, Vietnam had 41 sugar mills in the North, 300,000ha of sugarcane and 300,000 farmers, but currently it has only 25 sugar mills in operation. However, many of these sugar mills are also in a state of “clinical death”.
Loc further said that sugar mills under the VSSA were very happy with the ministry’s decision to impose tax on sugarcane imported from Thailand.
He said: “Many domestic sugar mills have actively invested in technology, built chains with farmers to produce competitive products. However, subsidy and dumping
fraud have been found after the investigation, which is the reason why sugar enterprises are struggling.”
Loc believed that the taxation is reasonable because now the domestic sugar price was approximately similar to the Thai sugar price. By doing so, Vietnam’s sugar industry is competitive with sugar imported from Thailand and other countries.
This decision will help create a fair environment and playing field, as well as stop the industry’s slump. More importantly, it will help create sustainable livelihoods for sugarcane farmers in remote and border areas.
Taking advantage of this opportunity, sugar companies are also recommended
to rebuild links with farmers, re-establishing quality raw material areas after a long hiatus due to a prolonged period of capacity reduction.
However, the restoration of the sugarcane growing area cannot be completed in a short period of time. It will take at least three years, so businesses need to assist farmers in improving their lives to become more engaged with sugar cane.
Phan Van Chinh, an expert at the ministry, recommended that sugar businesses need to make better use of by-products of the sugarcane industry (cane tops, bagasse, filter mud and molasses).
THE US National Aeronautics and Space Administration (NASA) on February 22 released the first audio from Mars, a faint crackling recording of a gust of wind captured by the Perseverance rover.
NASA also released the first video of last week’s landing of the rover, which is on a mission to search for signs of past life on the Red Planet.
A microphone did not work during the rover’s descent to the surface, but it was able to capture audio once it landed on Mars.
NASA engineers played a 60-second recording.
“What you hear there 10 seconds in is an actual wind gust on the surface of Mars picked up by the microphone and sent back to us here on Earth,” said Dave Gruel, lead engineer for the camera and microphone system on Perseverance.
The high-definition video clip, lasting three minutes and 25 seconds, shows the deployment of a red-and-white parachute with a 21.5m-wide canopy.
It shows the heat shield dropping away after protecting Perseverance during its entry into the Martian atmosphere and the rover’s touchdown in a cloud of dust in the Jezero Crater just north of the Red Planet’s equator.
“This is the first time we’ve ever been able to capture an event like the landing on Mars,” said Michael Watkins, director of NASA’s Jet Propulsion Laboratory (JPL), which is managing the mission.
“These are really amazing videos,” Watkins said. “We binge-watched them all weekend.”
Thomas Zurbuchen, NASA’s associate administrator for science, said the video of Perseverance’s descent is “the closest you can get to landing on Mars without putting on a pressure suit”.
Jessica Samuels, Perseverance’s surface mission manager, said the rover was operating as expected so far and engineers were conducting an intensive check of its systems and instruments.
“I am happy to report that Perseverance is healthy and is continuing with activities as we have been planning
them,” Samuels said.
She said the team was preparing for a flight by the rover’s small helicopter drone dubbed Ingenuity.
“The team is still evaluating,” she said. “We have not locked in a site yet.”
Ingenuity will attempt the first powered flight on another planet and will have to
achieve lift in an atmosphere that is just one per cent the density of Earth’s.
Perseverance was launched on July 30, last year and landed on the surface of Mars on February 18.
Its prime mission will last just over two years but it is likely to remain operational well beyond that. Its predecessor Curiosity is still functioning eight years after landing on Mars.
Over the coming years, Perseverance will attempt to collect 30 rock and soil samples in sealed tubes to be sent back to Earth sometime in the 2030s for lab analysis.
About the size of an SUV, the craft weighs a tonne, is equipped with a 2.1m-long robotic arm, has 19 cameras, two microphones and a suite of cutting-edge instruments.
Mars was warmer and wetter in its distant past, and while previous exploration has determined the planet was habitable, Perseverance is tasked with determining whether it was actually inhabited.
It will begin drilling its first samples in summer, and along the way it will deploy new instruments to scan for organic matter, map chemical composition and zap rocks with a laser to study the vapor.
One experiment involves an instrument that can convert oxygen from Mars’ primarily carbon dioxide atmosphere, much like a plant.
The idea is that humans eventually won’t need to carry their own oxygen on hypothetical future trips, which is crucial for rocket fuel as well as for breathing.
The rover is only the fifth to set its wheels down on Mars. The feat was first accomplished in 1997, and all of them have been from the US.
The US is preparing for an eventual human mission to the planet, though planning remains very preliminary.
MY A N M A R ’ S military leaders came under renewed pressure at home and abroad on February 23, with tightened sanctions from Washington and Brussels, and some of the biggest demonstrations against their rule since they seized power three weeks ago.
Authorities have gradually ratcheted up their use of force against a massive and largely peaceful civil disobedience campaign demanding the return of ousted leader Aung San Suu Kyi.
Three anti-coup protesters have been killed in demonstrations so far, while a man patrolling his Yangon neighbourhood against night arrests was also shot dead on the weekend.
Overnight the US blacklisted another two members of the regime – air force chief Maung Maung Kyaw and fellow junta member Moe Myint Tun – after announcing targeted sanctions against other top generals earlier this month.
Secretary of State Antony Blinken said: “We will not hesitate to take further action against those who perpetrate violence and suppress the will of the people.”
He called on the regime to end attacks on peaceful protesters, journalists and activists, release prisoners detained since the coup, and “restore the democratically elected
government”.
Washington’s announcement came hours after the EU approved sanctions targeting Myanmar’s military and their economic interests.
EU foreign policy chief Josep Borrell said: “All direct financial support from our development system to the
government reform is withheld.”
But he said the bloc would not curb trade ties for fear it could hurt the wider population.
The Myanmar military has deployed tear gas, water cannons and rubber bullets against protesters, with isolated incidents of use of live programmes
rounds.
They have also stepped up the presence of security forces in Yangon, Myanmar’s largest city and commercial hub.
‘Pray for them’
More than 680 people have been arrested since the February 1 coup, according to the Assistance Association for Political Prisoners monitoring group, with nearly all still behind bars.
Overnight internet shutdowns have also become routine, fanning fears of anticoup protester arrests during the blackouts.
The crackdown has failed to quell weeks of massive street demonstrations, joined by large numbers of striking civil servants, bank staff and healthcare workers.
Tens of thousands rallied on February 22 in the capital Naypyidaw, a military stronghold. More than 100 people were arrested as police chased protesters through the streets.
Demonstrators in Yangon ignored security forces and barricades set up around the city to hold impromptu vigils for protesters killed in the unrest.
“We can only pray for them,” said student Thura Myo. “Even when we are sad, our voices will be heard by the international community.”
The work boycotts have government administration along with business and the banking sector, and on the weekend the junta issued an ominous warning that suggested its patience was wearing thin.
A message aired on state media said: “Protesters are now inciting the people, especially emotional teenagers and youths, to a confrontation path where they will suffer the loss of life.”
Suu Kyi has not been seen since she was detained in a dawn raid but has been hit with two charges by the junta, one of them for possessing unregistered walkie-talkies.
Her hearing is expected on March 1.
ACROSS the world, politicians are going out of their way to promise fantastically expensive climate policies. US President Joe Biden has promised to spend $500 billion each year on climate – about 13 per cent of the entire federal revenue. The EU will spend 25 per cent of its budget on climate.
Most rich countries now promise to go carbon neutral by mid-century. Shockingly, only one country has made a serious, independent estimate of the cost: New Zealand found it would optimistically cost 16 per cent of its gross domestic product by then, equivalent to the entire current New Zealand budget. The equivalent cost for the EU and the US would be more than $5 trillion, each and every year. That is more than the entire US federal budget, or more than EU governments spend across all budgets for education, recreation, housing, environment, economic affairs, police, courts, defence and health.
We are incessantly being told that renewables are ever cheaper and that a transition to green energy will make us richer. Yet, this facile argument is belied by reality.
Solar panels in some places make cheaper electricity at noon, but at night the cost is infinite. That is why across Europe, the higher the share of wind and solar, the higher the household cost of electricity. German consumers had to pay €31 billion last year to support supposedly cheaper green energy. The UN Climate Panel found that of 128 analysed climate policies all made us poorer.
Tellingly, European Commission vice-president Frans Timmermans recently admitted that climate policies would be so costly that it would be a “matter of survival for our industry” without huge, protective border taxes.
Climate change is a real, man-made problem. But its impacts are much lower than breathless climate reporting would suggest. The UN Climate Panel finds that if we do nothing, the total impact of
climate in the 2070s will be equivalent to reducing incomes by 0.2-2 per cent. Given that by then each person is expected to be 363 per cent as rich as today, climate change means we will ‘only’ be 356 per cent as rich. A problem, yes, but hardly the end of the world.
Climate policies could end up hurting much more by dramatically cutting growth. Comprehensive studies show that for rich countries, lower growth means higher risks of protests and political breakdown. This isn’t surprising. If you live in a burgeoning economy, you know that you and your children will be much better off in the coming years.
Hence, you are more forgiving of the present. If growth is almost absent, the world turns to a zero-sum experience. Better conditions for others likely mean worse conditions for you, resulting in a loss of social cohesion and trust in a worthwhile future. The yellow-vest protests against ecotaxes
that have rankled France since 2018 could become a permanent feature of many or most rich societies.
Yet, politicians focus on ever stronger climate policies that lower and potentially eradicate growth over the coming decades. This would delight a few job-secure academics that from comfortable ivory towers advocate degrowth for climate, but it would lead to tragic outcomes of stagnation, strife and discord for ordinary people.
Most voters are not willing to pay for these extravagant climate policies. While Biden proposes spending the equivalent of $1,500 per American per year, a recent Washington Post survey showed that more than half the population was unwilling to pay even $24.
Moreover, these policies have little impact. If all Organisation for Economic Cooperation and Development countries were to cut their carbon emissions to zero tomorrow
and for the rest of the century, the lack of energy would devastate societies. Yet, run on the standard UN climate model, the effort would make an almost unnoticeable reduction in temperatures of 0.4 degree Celsius by 2100.
This is because more than three-quarters of the global emissions in the rest of this century will come from Asia, Africa, and Latin America. These nations are determined to lift their populations out of poverty and ensure broad development using plentiful energy, mostly from cheap fossil fuels.
The last 30 years of climate policy have delivered high costs and rising emissions. The only reliable ways to cut emissions have been recessions and the Covid-19 lockdowns, both of which are unpalatable. Expecting nations to stop using cheap energy won’t succeed. We need innovation.
Take the terrible air pollution in Los Angeles in the 1950s. It wasn’t fixed by naïvely
asking people to stop driving cars. Instead, it was fixed through innovation – the catalytic converter allowed people to drive further yet pollute little. We need to invest in research and development to make green energy much cheaper – from better solar, wind and batteries, to cheaper fission, fusion, and carbon capture.
Spending trillions on enormous and premature emissions cuts is an unsustainable and ineffective Western world approach. Instead, we should spend tens of billions to innovate the price of green energy below fossil fuels. That is much more effective, realistic and will make everyone switch.
The writer is president of the Copenhagen Consensus, visiting fellow at the Hoover Institution, Stanford University, and the author of, most recently, False Alarm:
How Climate Change Panic Costs Us Trillions, Hurts the Poor, and Fails to Fix the Planet.