Remarks by Ambassador William A. Heidt at the AmCham Event on Cambodian Taxation Outlook & Plans for the Future

Himawari Hotel, Phnom Penh
September 1, 2017
(as prepared for delivery)

Your Excellency, Kong Vibol, Director General of the General Department of Taxation, and other representatives of the Cambodian government;
H.E. Rajiv Kumar, Charge d’Affaires of the Embassy of India (and fellow parent of a 14-year old boy);
AmCham President Mr. Charles Esterhoy, InCham President Mr. Sandeep Majumdar, and members of the U.S., Indian and Cambodian business communities;
Ladies and gentlemen.

When I joined the State Department 30 years ago, I never thought I would be standing before an audience on a Friday night to talk about taxes. But a career working in development economics has drilled into me just how important taxes are.

The very simple bottom line is that taxes, and tax policy, are two of the most critical factors in both attracting investment and fostering a country’s development.

The key development challenge countries face is raising enough domestic revenue to fund the infrastructure, health, education, and poverty reduction programs they need to move up the development ladder.

Lots of developing countries receive foreign assistance, but the ones that succeed are the ones that learn to raise their own funds to finance their own development. Think about the formerly poor, but now very successful Korea, Malaysia, or Mexico. Or increasingly, Cambodia.

But, of course, it’s not just about raising revenue. Experience around the world has shown that successful countries develop and implement policies that raise revenue but also facilitate investment; that incentivize people to pay taxes rather than avoid them; that make sure everyone pays their fair share. Taxes that are applied consistently, transparently, and fairly.

Finding this sweet spot is not easy and it is something that every country, regardless of its level of development, has struggled with. The issues I just mentioned are the same ones driving the tax reform debate in the United States.

For a country like Cambodia that has changed so much, so quickly, the task is even more complex. That’s because in addition to developing sound tax policy, and implementing it fairly, Cambodia is also moving from an era of low compliance to an era of hopefully high compliance. That raises very large equity issues between long established companies and new arrivals.

How that process works out will affect powerfully Cambodia’s efforts to attract better, bigger, and more sophisticated foreign investment.

I am very proud that the United States has helped the DGT for many years to get this balance right.

Since 2012, our Department of Treasury has provided nearly $3 million technical assistance to the General Department of Taxation .
Among other issues, we have helped the DGT increase its capacity to administer and collect taxes through training, human resource development, assistance on tax examination procedures, and the development of internal audit policy and procedure manuals.

In 2016, the Minister of Economy and Finance and H.E. Kong Vibol awarded four Treasury Department officials the prestigious Sahametrei Medal in acknowledgement of their work to help Cambodia increase its tax collection capacity.

Throughout our work together, I am proud to say that we have had a strong partner in His Excellency, Kong Vibol. Both he and his team have shown a willingness and determination to build Cambodia’s tax system from the ground up.

I will say very honestly that very few Royal Government of Cambodia officials have done more to drive Cambodia’s impressive development that H.E. Kong Vibol.

Your Excellency, I understand there has been a lot of press reporting lately about a couple of tax cases involving American institutions. I can’t quite remember their names…Of course, this isn’t the right venue to get into these cases, even if I am a bit tempted…

What this event is, is an excellent opportunity to have a good exchange on a really critical economic policy issue between some of the top foreign companies in Cambodia and the national tax authorities, with the goal of building a stronger partnership and stronger economy in Cambodia.

I want to thank both AmCham and InCham for having the foresight to put this program together tonight.

So with that, I would like to turn the podium over to tonight’s featured speaker, Director General of the General Department of Taxation, His Excellency Kong Vibol.

Thank you very much.