Cambodia: Leading Paper Threatened with Closure

Arbitrary Tax on Cambodia Daily an Assault on Independent Media

| 2 September 2017

(Bangkok) – The Cambodian government should end its politically motivated threats and legal action to close the independent Cambodia Daily, Human Rights Watch said today. The newspaper faces closure and confiscation of its assets on September 4, 2017, if it does not pay a US$6.3 million back tax bill based on false financial assumptions and rushed enforcement in violation of standard procedures.

“The government’s targeting of the highly regarded Cambodia Daily is one of the gravest threats to freedom of the press in Cambodia since the 1991 Paris Peace Accords,” said Phil Robertson, deputy Asia director at Human Rights Watch. “Cambodia’s donors should call upon the government to cease its legal actions against the Cambodia Daily until a legitimate audit of its alleged tax debt – that is conducted in an independent, fair, and timely manner – proves there is a genuine bill to be paid.”

The Cambodia Daily is one of Cambodia’s few investigative news outlets, with an award-winning global reputation for unbiased news reporting in English and Khmer since 1993. The Daily’s staff told Human Rights Watch that unless the tax bill is paid, the authorities have threatened to enter the Daily’s offices and seize its assets on September 4. The Ministry of Information has already delayed extending the newspaper’s press license, which expired in mid-August.

On August 4, after months of government harassment of the paper's journalists, tax authorities hit the Cambodia Daily with a US$6.3 million tax bill alleging non-payment of tax since 2007. The authorities based the bill on assumed income and a profit of 20 percent, with additional penalties and interest, but did not review the Cambodia Daily’s financial books despite offers to make those accounts available for inspection. The paper maintains it has taken all steps to properly register with the government since the country required news and media companies to do so in 2016 and said that it has paid legally-owed taxes. The newspaper’s request to the General Department of Taxation (GDT) to stay punitive action pending conduct of a legitimate audit of the tax bill was rejected.

The government has given the Cambodia Daily 30 days to pay or “pack up and go,” as dictated in a recent speech by Prime Minister Hun Sen, head of the ruling Cambodian People’s Party (CPP). Hun Sen has described the Daily as a “thief” and the paper’s Cambodian staff as “servants of foreigners.”

GDT tax correspondence to the Cambodia Daily, including the notice of the tax bill and the GDT denial of an audit, was leaked in letters containing confidential tax information to the CPP-aligned Fresh News media outlet, even before letters to the newspaper were postmarked. Such leaks violate article 94 of the country’s Law on Taxation, which states that the, “tax administration and every person who is or has been official and agent of the tax administration must keep confidential the information pertaining to the taxpayer.” Expectations that the government will move to close the Daily on September 4 has effectively kept the paper from collecting payments for subscriptions and advertising, or booking any future advertising, making it financially impossible to continue operations.

Within weeks of the leaks about the Cambodia Daily’s supposed tax evasion, GDT letters emerged suggesting that Radio Free Asia and Voice of America, two US government-funded media outlets, could be similarly targeted.

An Economy and Finance Ministry spokesman has denied any political motive for these actions. However, officials have also raised these issues with regard to a consortium of nongovernmental organizations, the “Situation Room,” which reported on irregularities in the local commune elections in June 2017. The government recently put the Situation Room under investigation for allegedly violating a new law on nongovernmental organizations and suggesting its work for free and fair elections aimed at fomenting a possible “color revolution” to topple the government.

Since the government ordered the Situation Room to stop its monitoring activities, three of its member organizations have received notices that they must address potential back tax issues. Government investigations about possible taxes owed by these three groups – the Cambodian League for the Promotion and Defense of Human Rights (LICADHO), the Cambodian Human Rights and Development Association (ADHOC), and the Committee for Free and Fair Elections in Cambodia (COMFREL) – are ongoing. The government’s tax campaign seems designed to threaten or even shut down the country’s leading independent voices, Human Rights Watch said.

“Unless there is a global outcry, there is every reason to believe that Hun Sen’s government will kill off the Cambodia Daily and end its 25 years of independent news and objective criticism,” Robertson said. “Countries that for nearly three decades have invested their energies and resources in a free and open Cambodia should realize that all is about to be lost. They need to denounce the government’s action or accept a share of the blame.”