Cambodia’s Tax Revenue Falls Short Amid Economic Headwinds

[geovalin]

 

 

Cambodia’s tax revenue for the first half of 2025 has reached just over $3.3 billion, amounting to 53.4% of the government’s annual target, according to a report released by the Ministry of Economy and Finance on Monday. Officials now warn that total revenue may fall 13.5% short of the year’s goal due to declining profit taxes, VAT, and special levies.

 

The country’s two tax-collecting bodies—the General Department of Taxation (GDT) and the General Department of Customs and Excise (GDCE)—reported modest year-on-year growth. GDCE collected $1.497 billion, up 16.5%, while GDT brought in $1.808 billion, a 2.5% increase. However, these gains have not offset broader economic pressures.

 

Director General Kun Nhim cited several challenges, including the growing complexity of free trade agreements, a shift toward domestic production, and generous tax incentives aimed at attracting foreign investment. He also pointed to the rise of electric vehicles and increasingly sophisticated tax evasion tactics as factors undermining revenue collection.

 

The ministry noted that sectors such as construction and real estate are expected to grow only marginally, despite ongoing incentive schemes. These trends, coupled with subdued consumer activity, have led to a cautious outlook for the remainder of the year.

 

In response, the GDT has accelerated reforms under its 2024–2028 strategic plan, focusing on improved taxpayer services, streamlined registration, and enhanced audit and debt management systems. The aim is to boost fiscal compliance through greater transparency and operational efficiency.

 

While the government remains committed to modernising its tax infrastructure, the shortfall underscores the fragility of Cambodia’s post-pandemic recovery and the need for more resilient revenue strategies. With regional competition intensifying and domestic growth slowing, policymakers face a delicate balancing act between incentivising investment and maintaining fiscal stability.

 

-2025-08-26