Kingdom of Cambodia

Nation Religion King

Welcoming Address
by

Sr. Minister KEAT CHHON,
Minister of Economy and Finance

At

Tax Administration Course III
Introducing and Operating the Self-Assessment System
in Asian Countries
 

21-23 March 2006, Siem Reap, Cambodia.

Mr. Peter McCawley, Dean, ADB Institute,
Mr. Yukitoshi Kimura, Commissioner, National Tax Agency, Japan,
Mr. Manodharm Sunthorn, Director General, Tax Department, Lao PDR,
Mr. Sim Eang, Director, Tax Department, Cambodia,
Distinguished participants,
Ladies and gentlemen,

I am very pleased and honored to be here with you this morning to open the high level of tax administration course III- introducing and operating the self-assessment system in Asian countries.

This course is jointly organized by the Asian Development Bank Institute (ADBI) in collaboration with the Royal Government of Cambodia and National Tax Agency (NTA), Japan. I would like to express my sincere thanks to ADBI and NTA for their cooperation in organizing this important course. We appreciate highly their continued efforts and supports to Cambodia and other Asian countries through improving tax administration.

This tax Administration Course is participated by around 10 Asian countries to share their best practices and experiences in tax administration. This course have enable participants to deepen their understanding of one another' introducing and operating self-assessment and collect ideas for improving and effectiveness of their own tax systems.

Under the official-assessment/ direct tax system (in Cambodia call estimate regime), the tax official is responsible for identifying and calculating tax liabilities; and notifying these to taxpayers. The taxpayers' responsibilities consist essentially of providing information and completing tax returns and of paying tax.
Under the self-assessment system, taxpayer requires to disclose and assess his own liabilities, rather than waiting for inquiries and assessment from tax official. The potential benefit is lower compliance and administrative cost. Therefore, tax administration can improve their resources for checking, screening, auditing, and investigation work, and devote more resources to provide service to taxpayers.

The topics for discussion in this course reflect the interests and concerns of all countries. Allow me to touch briefly on them:

The first topic is the "Incentive introduced by each country to promote self-assessment system". This incentive is in the form of providing high standard service to the taxpayer such as tax education, seminar, leaflets, response, advertise on TV, radio, newspaper. The high standard taxpayer services will promote voluntary compliance by improving taxpayer understanding and confidence in the tax system. This also prevent abuse of tax law, as well as lower the incidence of tax evasion, ultimately leading to a more positive view of the tax system.

The Second discussed topic is focus on the "Practice of regular book-keeping for self-assessment system". This is of core interest of self- assessment system. Every tax administration may request taxpayers under self-assessment system to keep books of account, supporting documents, and other financial documents (balance sheet, income statements, journals, tax invoices) pertaining to the business. Taxpayer must submit these books and documents to the tax administration for audit ,inspection when requested, and must preserve these books or documents for a period of years.

Ladies and Gentlemen,

The third topic is focus on the "SMEs and the self-assessment system". Every country want to promote Small and Medium Enterprises (SMEs) in order to foster economy growth, increase employment, reduce poverties. However, under self-assessment system, taxpayers are responsible for filing tax return and paying tax by themselves and maintain book-keeping. This let to increase compliance cost of SMEs whose incomes are insufficient to employ a tax advisor to assist them for comply with a mandatory requirement to self-assess the tax calculation. Therefore, tax administration can be further simplified to help those SMEs to apply self- assessment system and providing a low cost compliance service for people with less complex tax problems. Moreover, tax incentive may be in the form of tax exemption, tax holiday, and other special tax treatment.

The fourth topic is focus on the "Non-compliance and the strengthening of tax audit". Strengthening tax audit is a very important of any self-assessment system to provide a visible deterrent to non-compliance taxpayers. To ensure the maintenance of compliance in the medium to longer term, it is important that each and every taxpayers perceive that self- assessment is required to audit in his tax return if they commit tax evasion or under declaration. With limited of resources, tax administration requires high skill, audit techniques and methods of tax officials to visit taxpayers' premises in order to check directly the accuracy of the taxpayers' records. Random auditing and audit selection program is needed to ensure compliance .

The final discussion topic is focus on the" training of tax officers, introduction of IT technologies". The introduction of enhanced and training course for staff aim at increasing capacity building of tax officials. Some training may provided by tax administration's own training staff and some by outside professionals or overseas. This training also promotes more dynamic and innovative approach to the administrative system as well as improving taxpayer related attitudes.
A well-designed computer system is a useful tool of tax administrators, and when used effectively can reduce the cost of operations, improve efficiency of controls, and assist taxpayers to comply with tax legislation. However, the benefits of computer processing are offset by associated expenditures. These include not only the capital costs of purchasing equipment, software but also recruitment, training, and management of specialized personnel to operate the equipment and to plan, design, test, implement, and maintain the computer system.

Once again, on behalf of the Royal Government of Cambodia, allow me to express my sincere gratitude to ADBI and NTA for their valuable contribution extended to the Royal Government of Cambodia and other Asian countries in order to improve tax administration. We look forward for your continued support to strengthen Cambodia through further course and supporting for further tax administration reform to achieve its ultimate goal – sustainable economic growth and prosperity of the nation.

I wish you all fruitful, successful and productive discussions in this course over the next few days. I hope that all participants will actively engage in sharing of experiences and ideas over various issues, and take this opportunity to build new friendships in this auspicious occasion. I hope that you will enjoy your stay in Siem Reap and take some time to see Cambodian culture, especially Angkor Wat which is one of most famous place in the world.

Thank you for your attention. !