Tax Incentives in Cambodia

Assessing tax relief from targeted investment tax incentives through corporate effective tax rates

“…Tax allowances can proportionally reduce standard allowances or apply in addition to them. For tax exemptions, capital expenditure incurred in activities that generate tax exempt income may (Eswatini 25 , Kenya 26 and Senegal 27 ) or may not (Eswatini 25 and Mauritius 28 ) give rise to a tax deduction. Accordingly, standard capital allowances may or may not apply during the exemption period.…”

“…3) A free port operator engaged in the manufacture of goods meant for local market in whole or in part is taxed at a reduced 3% rate provided that the satisfies prescribes any conditions relating to the substance of its activities. Source: Author's elaboration based on the OECD ITID, UNCTAD (2019 [25]), Dube, Matsika and Chiwunze (2020 [26]) and national sources.…”

“…In Eswatini, tax exempt income in SEZs benefits from a standard capital allowance during exemption period only on buildings, green technology allowance and R&D, but does not specify allowances for other capital assets, such as industrial machinery (Special Economic Zones Act of 2018, section 20 and first schedule) 26. In Kenya, capital allowances, as defined in the second schedule of the Income Tax Act, may accrue within the 10 year period in which the tax exemption applies to enterprises operating within Export Processing Zones as mentioned under paragraph 2(f) of the Third Schedule 27.…”

Building an Investment Tax Incentives database

“…Specifically, the OECD Investment Tax Incentives database focuses on four CIT incentive instruments, which are the most widely used CIT-based instruments in the countries surveyed so far: reduced rates, tax exemptions, investment tax allowances and investment tax credits (Table 1). 12 OECD database that compiles qualitative information on R&D and innovation policies, covering both tax and non-tax incentives (EC and OECD, 2020 [33]).…”

“…For example, Eswatini's Ministry of Finance may grant 'Development Enterprise Status' to businesses deemed 'beneficial to the economy', which provides them with incentives in addition to those specified in the tax law, but without clearly defining how the selection is made. 33 Overall, clear-cut and transparent rules-based eligibility criteria facilitate their verification (i.e. based on achieving those criteria) reducing the risk for discretion (IMF, OECD, UN, World Bank, 2015 [2]).…”