1% Tax for Higher Studies

KHMER TIMES
SUM MANET

Due to limited intakes in public universities, many Cambodian parents send their children to study in private higher education institutes. KT/Fabien Mouret

All private higher education institutions (HEIs) in Cambodia will only have to pay a one percent tax on their income till 2018, according to a prakas or regulation issued by the Ministry of Economy and Finance this week, to help shoulder the government’s financial burden for expanding access to university education.

The ministry, in a statement issued on Monday, said private HEIs played an important role in helping provide opportunities for higher education and to absorb enrollment demand due to limited public university places. Because of this, the statement added, efforts needed to be made to give incentives to the sector and to ease the burden of parents sending their children to study in HEIs.

“All private HEIs will receive preferential tax rates and pay only a minimum of one percent tax till 2018,” said the prakas.

Prior to 1997, private HEIs were not allowed to operate in Cambodia. In 1997, Norton University was established and legalized as the first private university in Cambodia.

According to a study by the Asian Development Bank (ADB), typical private HEIs focus on low-cost programs that require minimal investments but yield great financial return.

“Such programs offered include business administration, accounting and information technology. These programs are usually in synergy with student demand and do not need large capital funds for purchasing expensive equipment or establishing laboratories,” the ADB study pointed out.

Kuoch Mengly, founder of the American Intercon Institute that prepares students to study in US universities, welcomed the government move and told Khmer Times yesterday that the flat one percent tax will help build more human capital in the HEI.

“I think this preferential tax rate is the best move for Cambodia as the country is still developing its higher education sector. Private institutions offering higher education need incentives in order to grow and build their human resources,” said Mr. Mengly.

Not all, however, agreed that the tax incentive alone would spur the growth of private HEIs in the country and enable them to offer quality higher education.

“The bulk of private higher education institutes in Cambodia tend to emerge without a clear regulatory framework and accreditation,” said Tous Sophoeun, dean of the architecture and urban planning faculty of the private Pannasastra University.

“They need more than a tax incentive to improve themselves and need help to expand beyond offering a narrow range of homogenous business-related programs of questionable quality,” said Mr. Sophoeun.

“With the growing expansion and diversification of the private higher education sector, one way for the government to respond is to formulate effective policies and regulations for assessing and ensuring the quality of private higher education institutions,” he said.