Tax on Unused Land in Cambodia

• 10 August 2020
• Local News
• 14505 Views

In Cambodia, some properties are taxable, while others are not. Among them, unused land is considered taxable, although tax payments on properties are not, all the same, depending on the type, size, and location of the property. For instance, the tax base of unused land is not the same as the tax base of immovable property, as stated in Article 13 of the Finance Law in 2010, which refers to land, houses, buildings, and other structures built on it. (Read more)

The tax on unused land has been implemented since 1996 by the Finance Act of 1995. Article 27 of this law states that the unused land tax is levied on both non-constructed land and the abandoned constructed land, located in the cities and the areas levied by the Unused Land Appraisal Committee (ULAC). The tax on unused land does not fall under the scope of tax on Immovable Property. This unused land tax is paid by the owner at a rate of 2% of the tax base.

From 1996 to 2006, according to Article 30 of the Finance Act of 1995, this tax was allowed to be deducted from the tax base on an area of 1,200 square metres per plot; but since 2007, the deduction has no longer been permitted.

The unused land tax is intended to prevent the act of buying land and waiting for higher prices to sell for excess profit and stimulate land use in line with the state’s development purposes to boost economic activities, create jobs, and generate more income for sub-national institutions.

The collection of unused land tax is collected nationwide on land both with construction and land without construction abandoned in cities levied by the Unused Land Appraisal Committee (ULAC), as stated in the Decision No 007 SSR.SHV.PD dated 29 December 2005.

However, land with crops is considered land in use. As such, this kind of land is not subject to tax on unused land. Land with crops will be not subject to unused land tax unless the monthly income from the cultivation activities exceeds 80% of one-twelfth of the land value in the tax year multiplied by the coefficients determined by the Prakas No 744 PRK.SHV.PD dated 21 November 1996 on coefficient determination for tax on unused land.

All owners of unused land can pay the tax at the provincial tax branches where the property is located, and if the property is in Phnom Penh, the owner can pay the tax to the General Department of Taxation. The landowner must submit a tax declaration of unused land from 1 January to 30 September of each tax year. For example, if the land is located in Siem Reap, the owner must submit a tax return and pay tax to the Siem Reap Tax Branch.

To calculate tax, the owner has to multiply the tax base by the tax rate (2%). Before calculating the tax, the owner has to first calculate the tax base, which is the total area of the land multiplied by the value of the land per square meter (Value determined by the Unused Land Appraisal Committee). For example, in Siem Reap, an unused land plot in Zone 2 is 2,000 metres long and 700 metres wide. The Unused Land Appraisal Committee determined that the land was worth 50,000 riels per square metre.

In case of negligence, the owner who fails to file a tax return or fails to pay the unused land tax is subject to a penalty of 10% or 25%, and 40% of the amount of the underpaid tax adding interest at 2% of the amount of the underpaid tax for each month or the portion of the month that the underpaid tax has not been paid.

Recently, the General Department of Taxation has urged all immovable property owners in Phnom Penh and all provinces to pay their property taxes, including the tax on unused land for 2020 before the end of 30 September 2020, according to the notification of the General Department of Taxation on 28 May 2020. (Read more)

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