Azerbaijan has become the first country in Eastern Europe to sign a double taxation agreement (DTA) with the Kingdom. The agreement aims to eliminate double payment on income tax and prevent tax evasion and avoidance.
With the addition of the latest agreement, Cambodia has now signed DTAs with 15 countries and jurisdictions.
The signing ceremony took place on October 12 at the Presidential Palace in Baku, Azerbaijan, between Cambodian Minister of Commerce Cham Nimul and Azerbaijani Minister of Economy Mikayil Jabbarov. The ceremony was witnessed by Prime Minister Hun Manet and Azerbaijani President Ilham Aliyev.
The General Department of Taxation (GDT) described the signing of the DTA as a major achievement for the seventh-mandate government.
“Through this agreement, bilateral tax cooperation between Cambodia and Azerbaijan will be strengthened and expanded, generating mutual benefits,” it said.
It explained that DTAs benefit signatory parties by strengthening bilateral cooperation, providing greater certainty over taxing rights, and expanding the tax base through the attraction of foreign direct investment, capital flows, technology transfers and foreign expertise. They also protect residents against unfair tax treatment and safeguard domestic tax revenue through cooperation between the two countries in combating tax evasion.
DTAs that have entered into force and are being effectively implemented in Cambodia include agreements
Cambodia has signed DTAs with Singapore, China, Thailand, Brunei, Vietnam, Indonesia, Hong Kong, Malaysia, South Korea, Macao and Turkey, among others.
Cambodia has also concluded or is continuing negotiations on DTAs with several other countries, including France, Japan, the United Arab Emirates, Morocco and Qatar.
Hong Vanak, an economist at the Royal Academy of Cambodia, told The Post that signed trade agreements are intended to deliver mutual benefits, as the parties involved typically engage in lengthy and thorough negotiations before reaching an agreement.
He said a DTA could potentially reduce government tax revenue but would also encourage investors from both countries to invest in each other’s markets.
“Tax exemptions or reductions are among the key benefits sought by investors. Eliminating double taxation can also help lower the cost of goods, thereby promoting exports to international markets,” he noted.
Speaking at a seminar on “Recent Developments in International Taxation” organised by the GDT on August 14, Seng Cheasith, director of the GDT’s Department of Legislation, Tax Policy and International Tax Cooperation, explained that a DTA allocates taxing rights between the two signatory countries.
He said Cambodia negotiates DTAs with key investment partners to attract and facilitate investment and international trade, while preventing and combating tax evasion at both national and international levels.
“DTAs play an important role in encouraging investors by eliminating double taxation and providing greater certainty,” he said.
He added that under information-exchange mechanisms for tax purposes, the parties to an agreement are required to cooperate in seeking, collecting and exchanging taxpayer information to strengthen transparency, prevent tax fraud, promote compliance and support increased tax revenue by providing tax auditors with comprehensive information.