MICROCAPITAL BRIEF: Cambodian Microfinance Association Members Refusing to Charge Clients Value-added Tax

The 82-member Cambodian Microfinance Association (CMA) recently announced that its affiliated microfinance institutions (MFIs) are declining to enforce the 10-percent value-added tax (VAT) that the country’s Ministry of Economy and Finance (MEF) has levied on financial services. CMA Chairman Hout Ieng Tong reportedly criticized the lack of lead time given to adjust to the change, adding that, “We are worried that clients will be annoyed when they use our financial services because in the past they have never been informed that they are obligated to pay VAT.” Officials from the General Department of Taxation have agreed to meet with representatives of CMA to discuss their grievances and possible resolutions.

CMA is a nonprofit that was established in 2004 and seeks to increase communication among MFIs and relevant stakeholders such as government authorities, donors, creditors and investors.

By Jacob O’Driscoll, Research Associate

Sources and Additional Information

The Phnom Penh Post: Microlenders Refuse to Apply Prescribed VAT

Cambodian Microfinance Association

Ministry of Economy and Finance

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