Cambodia is implementing a new taxation system for casinos, according to local media reports. The Ministry of Economy and Finance (MEF) officially adopted a new tax on gross gaming revenues model on December 30, replacing the country’s previous “lump sum” system, which had been in place for several decades and called for casinos to pay a flat rate on their revenue
Commercial gambling businesses are now also required to follow the International Financial Reporting Standards. These are a set of accounting standards that govern how particular types of transactions and events should be reported in financial statements, and were developed by the International Accounting Standards Board (IASB).
Mey Vann, Secretary of State of MEF, told Khmer Times that the new rules and procedures of taxation would enable the government “to improve transparency and accountability” in tax collection from Cambodia’s commercial gambling industry. They are also expected to help the government in the implementation of anti-money laundering and anti-corruption measures.
“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,” Vann explained to the cited source.
“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 evidence,” Vann said.
The revenue-based tax model comes more than two years after Cambodia’s long-awaited casino bill, the Law on the Management of Integrated Resorts and Commercial Gambling (LMCG), was passed into law. Vann also unveiled plans to force casino owners to change the word “casino” to “commercial gambling” on all signage once a five-year grace period expires, in an effort to market Cambodia’s casinos as “entertainment centers” instead of gambling hubs.
“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,” Vann told Khmer Times. The LMCG sets the tax rate on mass gaming at 7% and on VIP at 4%, as well as outlining a raft of other new regulatory controls. However, the MEF has noted that these controls will be gradually implemented over the course of the aforementioned five-year period.
The new guidelines and procedures to implement tax obligations on the commercial gambling industry are divided into two folds that would enable the General Department of Taxation (GDT) to properly regulate the industry, Khun Darith of auditing firm K Professional Accountants (KPA) told Khmer Times. The regime calls for monthly and annual tax collections.
“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, noting there are more than 100 licensed casinos in operation.
The new guidelines instruct 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, and maintain proper accounting records and retain the supporting documents and records for 10 years. Non-compliant casinos could face legal and regulatory action.
The novel taxation system follows a previous call for a crackdown on illegal gambling establishments by Cambodian Prime Minister Hun Sen, amid a rise in kidnapping cases linked to illicit operations. The policies also make it clear that only licensed casinos can continue to operate in the country.
Original article: https://www.yogonet.com/international/news/2023/01/11/65684-cambodia-implements-new-revenuebased-taxation-system-for-landbased-casinos
