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Tax Incentives in Cambodia

Author

Listed:
  • Mr. Manuk Ghazanchyan
  • Mr. Alexander D Klemm
  • Yong Sarah Zhou

Abstract

Cambodia, like its regional peers, offers a number of tax incentives to investors. This paper reviews these incentives to assess their costs and benefits, including their likely effectiveness in attracting capital and in supporting the diversification strategy. It finds that an important incentive, the tax holiday, differs materially from practice elsewhere in offering a deferral rather than exempting from tax and may not be very effective. Moreover, other features of the tax system, such as the high withholding rate on dividends, imply relatively high effective tax rates for foreign investors. The paper discusses potential reforms that weigh revenue and other costs of tax incentives against the need for a competitive tax system, including a shift from tax holidays toward investment allowances.

Suggested Citation

  • Mr. Manuk Ghazanchyan & Mr. Alexander D Klemm & Yong Sarah Zhou, 2018. "Tax Incentives in Cambodia," IMF Working Papers 2018/071, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2018/071
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    References listed on IDEAS

    as
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    6. Alexander Klemm & Stefan Parys, 2012. "Empirical evidence on the effects of tax incentives," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(3), pages 393-423, June.
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    12. Suzuki, Masaaki, 2014. "Corporate effective tax rates in Asian countries," Japan and the World Economy, Elsevier, vol. 29(C), pages 1-17.
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