Original report from Phnom Penh
09 December 2009
Confusion and hesitation over a new law on property taxes have shocked the country’s real estate market, which has yet to recover from the global economic downturn, financial analysts say.
According to the law, passed by the National Assembly earlier this month, taxes will be levied on land, houses and buildings worth more than 100 million real, or $25,000, but experts worry misunderstandings over the law will interrupt the recovery of the stagnant real estate market.
Chan Sophal, president of the Association of Cambodian Economists, said the new tax law had confused people who worry they have to pay a lot of money.
“Educating people about the tax is really important right now, or it will give a negative impact on real estate, as people take a step back or sell their property at a low price,” he said.
For example, a $50,000 home will be charged $25 per year in taxes: the value minus a $25,000 tax base, with a 0.1 percent tax. A $30,000 home would be taxed $5 per year.
Experts say the tax rate is not high enough to cause real trouble in the real estate market, but it is confusion over the tax that has frozen recovery.
More than half of Cambodia’s 2.8 million homes could be taxed, according the National Valuers Association, which assesses property value in the country.
Real estate developers are concerned that if the law is promulgated within the next few weeks, or by the end of the year, buyers may become hesitant.
Sung Bonna, president of the association and the owner of his own real estate group, estimated that without the law, the market could bottom out by early 2010. With confusion over the new law taking place, that recovery will take more time.
“If the law is issued, buyers or investors will take a step back to wait and see,” he said. “They won’t buy, they won’t make a decision. If everyone just wants to wait, our real estate market will be down and quiet.”
If the situation continues, property values will decrease accordingly, he said.
Hesitation over the property tax could stall the market for an extra six months or a year, said Eng Bun Ung, president of ANFI, an Australia-based consultancy. Not only might the tax cause hesitation in potential homeowners, he said, but could also create hesitation in property investors.
Cambodia’s property market boomed from 2006 to 2008, but it slowed considerably after the downturn, in mid-2008, when values fell between 30 percent and 50 percent.
Property investment also went into decline, with fixed construction projects falling 20 percent in the last 10 months, to about $1.8 billion, according to government figures.
Im Chamrong, director-general of the Ministry of Land Management’s construction department, said the property tax would impact the real estate market, but he was unclear how significant the impact would be.
“We will inform our customers about this law,” said Sun Hum Lee, director for Gold Tower 42, a high-rise project in Phnom Penh. “By informing [them of this], I think it will decrease 10 percent or 20 percent of our sell amount.”
Youk Buntha, president of the Nay Sovan property development, said that since the law was passed, no new customers have come to view his 130 apartments, worth $20,000 to $30,000 each.
One buyer canceled his contract, because he was confused and thought he would have to pay “a lot” of money, Youk Buntha said.
“In fact, he had already decided to buy the house and agreed to deposit some money,” he said. “But he suddenly cancelled it and said he wanted to see the law first. So it has become an issue affecting our business.”
With the new law, Cambodia becomes the first developing country in Southeast Asia with a property tax; neither Burma nor Laos have one. By comparison, Thailand taxes citizens 12.5 percent on homes that are also used for commercial purposes, while Vietnam taxes a property-owner 0.03 percent of the construction cost.
According to the law, passed by the National Assembly earlier this month, taxes will be levied on land, houses and buildings worth more than 100 million real, or $25,000, but experts worry misunderstandings over the law will interrupt the recovery of the stagnant real estate market.
Chan Sophal, president of the Association of Cambodian Economists, said the new tax law had confused people who worry they have to pay a lot of money.
“Educating people about the tax is really important right now, or it will give a negative impact on real estate, as people take a step back or sell their property at a low price,” he said.
For example, a $50,000 home will be charged $25 per year in taxes: the value minus a $25,000 tax base, with a 0.1 percent tax. A $30,000 home would be taxed $5 per year.
Experts say the tax rate is not high enough to cause real trouble in the real estate market, but it is confusion over the tax that has frozen recovery.
More than half of Cambodia’s 2.8 million homes could be taxed, according the National Valuers Association, which assesses property value in the country.
Real estate developers are concerned that if the law is promulgated within the next few weeks, or by the end of the year, buyers may become hesitant.
Sung Bonna, president of the association and the owner of his own real estate group, estimated that without the law, the market could bottom out by early 2010. With confusion over the new law taking place, that recovery will take more time.
“If the law is issued, buyers or investors will take a step back to wait and see,” he said. “They won’t buy, they won’t make a decision. If everyone just wants to wait, our real estate market will be down and quiet.”
If the situation continues, property values will decrease accordingly, he said.
Hesitation over the property tax could stall the market for an extra six months or a year, said Eng Bun Ung, president of ANFI, an Australia-based consultancy. Not only might the tax cause hesitation in potential homeowners, he said, but could also create hesitation in property investors.
Cambodia’s property market boomed from 2006 to 2008, but it slowed considerably after the downturn, in mid-2008, when values fell between 30 percent and 50 percent.
Property investment also went into decline, with fixed construction projects falling 20 percent in the last 10 months, to about $1.8 billion, according to government figures.
Im Chamrong, director-general of the Ministry of Land Management’s construction department, said the property tax would impact the real estate market, but he was unclear how significant the impact would be.
“We will inform our customers about this law,” said Sun Hum Lee, director for Gold Tower 42, a high-rise project in Phnom Penh. “By informing [them of this], I think it will decrease 10 percent or 20 percent of our sell amount.”
Youk Buntha, president of the Nay Sovan property development, said that since the law was passed, no new customers have come to view his 130 apartments, worth $20,000 to $30,000 each.
One buyer canceled his contract, because he was confused and thought he would have to pay “a lot” of money, Youk Buntha said.
“In fact, he had already decided to buy the house and agreed to deposit some money,” he said. “But he suddenly cancelled it and said he wanted to see the law first. So it has become an issue affecting our business.”
With the new law, Cambodia becomes the first developing country in Southeast Asia with a property tax; neither Burma nor Laos have one. By comparison, Thailand taxes citizens 12.5 percent on homes that are also used for commercial purposes, while Vietnam taxes a property-owner 0.03 percent of the construction cost.
14 comments:
ARE YOU PEOPLE FUCKING OUT OF YOUR FUCKING MIND. WE ARE STILL RECOVERING FROM THE ECONOMIC SLUM CAUSED BY THE FUCKING RULING PARTY, AND NOW YOU IDIOTS BRING IN THE IMPOSITION OF PROPERTY TAX. YOU IDIOTS MUST BE FUCKING OUT OF YOUR FUCKING MINDS--YES, YOU, YOUR FUCKING RULING PARTY IDIOTS.
To the poster 1:42pm,
Indeed you are a truely ignorance one. Property taxation is not to cause problems for the poor at all. It is a good tax to impose on speculators on properties so that they won't steal more lands from the poor if these taxes are propery implemented. THe government should establish a commission of National revenue. The National commissionner should be a person from an independent background without affiating with any political party. This land tax should be established to tax corrupted officials and other powerfull person from tax evasion. If these individuals have invested in properties or building, these taxes are serving as the nets to tax them. Land tax should be exmempted from Agriculture lands and farm lands. If the corrupted officials have used their corrupted moneys to buy farmlands, peole can also indentify their names too.
This land tax and properties are being used in all countries excepte Cambodia and it is a loophole for corruption.
Areak Prey
It obvios that the CPP govenment and the people in charge have no fucken idea on how policy get developed and role out.
There were no enquiry or consultation with different stakeholders like the real estate, housing industries and the customer to view their concerns. It all about quick glab for the top 10 CPP officials.
Another ingeniously thought out plan.
Much of the yearly property tax coming to the government must be lost in the cost of assessing the value of all these properties. And the value of property fluctuates over time (so assessments would need to be done every year or so), and values change according to changes at the location (new roads, new markets, etc). So most properties would need to be regularly assessed - every year. That takes time .... do they have an army of experienced well-trained "valuers"! May be it's a cunning plan to employ all those "graduates" that have no jobs to go to.
What a colossal waste of effort.
Presumably property owners in order to be taxed would also need to show genuine land titles from the cadastral office (can see some issues there !).
Does this apply to commercial as well as residential real estate ? For residential owners who rent out their property and who actually pay the rental tax to the government does this represent another tax on top of that.
And 1.42 on a $500,000 valued house the owner would pay $475/year .. do you really think that this tax would stop speculators from as you say "stealing more lands from the poor" ? (when THEY would expect the value of the land/property to increase by at least $50,000 - 100,000 per year )
The amount of money to pay for tax is not the problem, but when implementing the law that is matter. Like in case of tax on vehicles, for motorcycle of 50CC, the old tariff is 4500 Riels, but when paying we need to pay 6000 Riels. I am afraid, it follows the same pattern when this new tax come into practice.
Sorry, 2:46 (not 1:42)
On a $500,000 valued house the owner would pay $475/year .. do you really think that this tax would stop speculators from as you say "stealing more lands from the poor" ? (when THEY would expect the value of the land/property to increase by at least $50,000 - 100,000 per year ).
2:46 PM
The government should collect of these money, and have the remaining and shove it into your ass. Yeah! Enough for your fucking political pundit want to be. I'm sure the remaing property tax revenue will be stuffed into your ass for a change--and I'm sure you would agree with me.
Dear Poster 3:04PM,
As I have said that National Commissionner shouldn't be from a man belong to any political party. This person should be indendent and therefore he can fully implement his tast to collect all national revenues. He must has all his power to collect all tax from all people of all level except the King who owned the crown properties. They must also differentiate different sizes of properties and not only in prize to stop people from building large size of properties from their corrupted moneys.
1-In USA, they taxed them in different state from 2% to 3% of the value of properties. They have to evalue each property in every two years.
2-In Australia, they tax 1% on the value of the property.
3-In New Zealand, property tax is 0.2%. But they tax more on commercial properties to subsidie poor residents.
Areak Prey
3:17 PM
You're fucked up again! This is East--not West, you asshole.
You asshole 3:17PM,
Your fucking idiot mother didn't teach you how to learn from others to be a good human.
The East such as Japan, Singapore etc.. are even taxing more to their citizen. In Singapore, the government has even taxed on inherited. So you have to pay tax before you received any moneys or properties from your fucking parents.
In China, on top of property taxes, you can own your property for only 70 years in Maximum. If you bought a property from someone else who has used that property for 10 years, you have only 60 years to own.
At least in New Zealand we have 999 years in property right.
The question is, do we trust the CPP? Everyone of them is a croke. Will they do it fairly to everyone who own the properties? They decide who to punish and who not to. they do not abide by the law. Cambodia has a dictatorial regime, period.
excuse my spelling.
this is just another way to make money....how much worst...for your land...your house....the value all came from their mouth....and the corrupted authority.....to ripped...off from people......to pay high or low tax...depend on .....$$$$$$ to him...
it's about time this site starts to screen out some of the posts it receives. it will at least spare the rest of us regular, decent, friendly people the unpleasant experience of being exposed to a diarrhea of obscenities spewed forth by some dipstick or half-wit who thinks he can get away with it. As we khmers used to say, "somdey sor chheat, mearyeat sor pooch".
1:13 PM
Yeah!
GO AND FUCK YOURSELF, FUCKED HEAD!
Post a Comment