A More Taxing Time for Cambodia’s Civil Society?

The tax woes of a major English-language newspaper is yet another sign of the government’s growing intolerance of its critics as polls near.

The Diplomat | 10 August 2017

Fears that the Cambodian government’s intolerance of its critics is worsening gained further momentum over the weekend when the tax department slapped a massive bill on a local English-language newspaper often critical of the ruling elite.

The Cambodia Daily, established 24 years ago as a non-profit non-governmental organization (NGO) designed to teach journalism, has been told to pay $6.3 million in back taxes, while the foreign and finance ministries have been ordered to investigate how many NGOs are compliant with local tax laws.

An audit of the Daily’s finances from 2007 to 2016 assessed that the newspaper must pay about $2.39 million in taxes, $957,784 in “additional” taxes and a further $2.95 million in interest, according to a report in the Phnom Penh Post. The paper was given 30 days to respond.

It’s an enormous sum for the Daily, a robust critic of Prime Minister Hun Sen and his ruling Cambodian People’s Party (CPP). Two of its reporters are currently before the courts.

But it has faced a change in direction since it was taken over by Deborah Krisher-Steele, daughter of the newspaper’s founder Bernard Krisher, a Japanese-based American.

Krisher-Steele wants the newspaper to run as “an ordinary company,” as opposed to an NGO, a tough ask in a local media environment already oversaturated with English language newspapers and magazines.

Whether that means the Cambodia Daily can afford such a bill remains to be seen.

But the tax hit has also upset other NGOs, who fear a similar fate with less than 12 months to go before the next national election, widely expected to be a tight race between Hun Sen and his opposition number Kem Sokha.

NGOs flourished here as the civil war ended in the 1990s, and they number around 5,000 today. Most are involved in low profile work in areas like agriculture and health. But those involved with human rights have faced an increasingly hostile government, angered by a long list of allegations including election rigging, land grabbing, and corruption.

NGO workers have been jailed alongside supporters of the opposition Cambodian National Rescue Party (CNRP). Many fell foul of defamation laws after being sued by CPP politicians. Those groups recently marked the one-year anniversary of the assassination of political analyst Kem Ley.

The government, however, insists it is not targeting anyone with its new measures. Instead, it says it is simply introducing legislation and enforcing laws that are common elsewhere. Despite this, Hun Sen continues to up the political ante, with comments like the fact that he would not accept a CNRP election victory because that would result in civil war.

It’s a difficult political backdrop, where taxes are a new twist in relations between the government, business, NGOs and media. And the ramifications could be felt far and wide.

Shortly after the tax bill story was broken by the government-friendly media outlet Fresh News, an online campaign erupted on social media asking why an “American newspaper” – alongside other foreign-run NGOs – did not have to pay any taxes.

Details in the story were gleaned from a tax department letter leaked to Fresh News and Naly Pilorge, the Director for Advocacy for the high-profile NGO Licadho, was highly critical of that.

“I think it’s completely inappropriate that partial tax and vague administrative information of individual newspapers or other businesses would be posted publicly by pro-government media without a process or final decision by relevant government institution,” she told the Phnom Penh Post.