Harmonisation of Docket Price Tables REF#6288

Cambodia’s General Department of Customs and Excise (GDCE) plays a crucial role in inspecting export-import goods, collecting revenues that include duties, special taxes, and value-added tax, and preventing and suppressing offenses. To determine the Customs tax and duty calculation, the value of imported goods is used as the basis by multiplying it with the rate of Customs duty. It is the responsibility of the importer to declare and pay tax based on the official commercial invoice from the manufacturers. Customs officers can verify the value declaration made by the importer or relevant individual. Customs value can be determined through different methods, including transaction value, transaction value of identical goods, transaction value of similar goods, induction value, calculated value, and the last method. The final value of the product for Customs purposes is stored in a document held by GDCE officials, called a docket price table.

In the automotive industry, non-authorised distributors import products into Cambodia without complying with legal obligations or requirements, putting authorised distributors at a disadvantage due to unfair competition. For example, when importing vehicles, non-authorised distributors declare the value based on the docket price, rather than following the value of the commercial invoice. This allows the grey market to offer a more affordable price for customers in the market, unlike the authorised distributor, who is required to follow a complicated process of compliance, homologation, vehicle safety standards, paying taxes, and paperwork.

Furthermore, authorised distributors have to declare the price based on the commercial invoice, which is often higher than the docket price. Authorised distributors also declare the value based on the actual price or value from the Original Equipment Manufacturers (OEM), and the value of the vehicles can differ based on the specification of the vehicle. Vehicles with more added options, or higher specifications, clearly are valued at a higher price. This leaves room for the grey market to import high-spec vehicles and declare their value as the docket price, omitting the higher value given by such specifications and thus cutting out a substantial amount from their tax liability.

The detrimental effects of unfair competition between authorised and unauthorised vehicle distributors are already being seen in Cambodia. Some of EuroCham’s automotive members have decided to leave Cambodia and have moved their offices to neighbouring countries. For example, Audi, the luxury vehicle brand, left Cambodia for Vietnam in 2022. Additionally, the authorised distributors of Mercedes-Benz and Porsche have announced the ceasing of operations on the Cambodian market in 2023.

Moreover, given that Cambodia is experiencing a nascent car parts assembly industry, and that the Royal Government of Cambodia is betting on this industry as part of a wider export diversification strategy, EuroCham’s Automotive Committee is concerned that car assemblers currently operating in the Kingdom may follow suit and leave, thus stifling growth in an emerging industry.

Finally, for the Royal Government itself, the retreat of established car distributors and assemblers from the country represents a significant potential loss of tax revenue, which could be used to fund important public services.