Prime Minister Hun Manet has announced a two-year tax exemption on key agricultural goods, such as mangoes, longans, aquaculture, animal husbandry, and palm oil production, in an effort to alleviate financial strains on the agriculture sector and the general public. This measure, announced during the 19th government-private sector forum, is an addition to existing relief measures for eight agricultural products spanning 2024-2025. The tax exemption aligns with Prakas 252, which focuses on manufacturing enterprises engaged in domestic supply or agricultural exports, but suppliers must meet specified conditions and provide verification to the General Department of Taxation (GDT).
Prime Minister Hun Manet emphasized the government’s commitment to prioritize the agriculture sector for tax exemptions and incentives as part of their efforts to drive development and bolster the economy. The decision to implement the tax exemption was made in response to requests from the private sector submitted to the Ministry of Economy and Finance. In the previous government-private sector forum, former Prime Minister Hun Sen had granted tax incentives for eight manufacturing enterprises involved in domestic supply and agricultural product exports, such as unmilled rice, milled rice, corn, beans, pepper, cassava, cashew nuts, and rubber.
The tax exemption has been well received by industry associations like the Cambodia Livestock Raisers Association (CLRA), whose members express relief over the financial strain being eased for livestock farmers across the nation. The two-year exemption covers one percent withholding tax and ten percent valued-added tax (VAT). This is particularly beneficial for livestock farmers as they were facing declining prices for pork and beef due to illegal imports of frozen meat. The CLRA also commends the Prime Minister’s commitment to crack down on such illegal imports and hopes for more effective implementation of the directives.
The Cambodian Aquaculturist Association (CAA) has also formally requested the tax exemption in the past, along with the CLRA. The CAA indirectly benefits from the exemption, as when a company that relies on the association for fish feed receives a tax exemption, they can offer the feed to farmers at an affordable price, thus supporting the aquaculture sector.
Prime Minister Hun Manet further advised the state-run electricity utility, Electricity of Cambodia (EDC), to explore providing incentives to industrial and agricultural consumers of electricity. The government has accepted the request to reduce electricity prices and permit the installation of solar panels on roofs to decrease production costs and ease the financial burden on the population. However, the possibility of price reductions relies on the prevailing situation, business sustainability, and supply stability, necessitating a thorough examination.
Overall, the tax exemptions and potential electricity incentives aim to support the agriculture sector in Cambodia and contribute to the country’s economic growth.