Go after non-tax-compliant lenders, GDT asks NBC

THE General Department of Taxation (GDT) has asked the central bank to take action against two lenders that were seen promoting their services on social media despite non-compliance with tax-regulations.

The request concerns Happy Loan Cambodia Co Ltd and Tiger Loan, and comes a few days after the National

Bank of Cambodia (NBC) issued a public warning on August 25 concerning advertisements and other types of promotion for illegal and deceptive lending businesses and practices.

The GDT notice, signed by its director-general Kong Vibol and dated August 31, disclosed that Happy Loan Cambodia “has registered for tax, but company details are not up to date, nor have they declared their taxes”, while Tiger Loan “has not met its tax registration requirements”.

Action by the NBC would “strengthen compliance with the Law on Taxation and Law on Banking and Financial Institutions [LBFI], improve the business environment and ensure fair competition, and especially promote the effective and efficient implementation of the law”, said the department, which is under the

Ministry of Economy and Finance.

The Post could not reach either lender for comment as of press time.

However, of note, Tiger Loan says on its Facebook page that it offers “quick and easy” unsecured loans nationwide from $50, with “straightforward paperwork” and “100 per cent guaranteed customer confidentiality”.

Speaking to The Post on September 5, Cambodia Microfinance Association

(CMA) spokesman Kaing Tongngy underscored that legitimate online lenders operating in the Kingdom are those licensed by the NBC or the finance ministry’s Non-Bank Financial Services Authority (NBFSA).

These lenders are regularly monitored by the authorities and have clearly-defined addresses, business

activities and client protection principles, he said.

“What we’ve seen on social media are mostly illegal operations conducted by different groups. We’ve witnessed a significant rise in these illegal online loan schemes since the beginning of Covid-19, when lots of people were strapped for cash.

“Unfortunately, we have also seen many fall victim to the online loans. These illegal operators charge ridiculously high interest rates, swindle their customers, fail to follow client protection principles, use intimidation and violence, and often lead to overindebtedness,” he added.

In its August 25 precautionary press release entitled “advertisement and illegal lending”, the NBC said that the banking and financial institutions which it licenses to conduct business include: commercial and specialised banks, microfinance institutions regardless of deposittaking status, financial leasing companies and rural credit institutions.

These institutions provide credit and other relevant services to companies, enterprises and individuals. They are under the control of the NBC and their clients are protected by law.

However, the NBC warned that it has observed some nefarious actors openly advertising loans through various mediums, including online ads, on social media or through leaflets and flyers in public places. Lending by these unlicensed companies or individuals is against the law, particularly the LBFI.

“In order to avoid being defrauded or any other consequences from obtaining informal credit and to maintain stability and public trust in the banking system, we call on the public to exercise increased caution, and encourage them to use the services of formal institutions.

“We condemn all forms of informal dissemination of information and lending. Meanwhile, we are cooperating with the authorities to take legal action against any companies or individuals who engage in illegal activities,” the letter added.