Union leaders on Friday said that exempting workers’ bonuses from tax calculations would go some way towards improving standards of living, which they say are falling despite pledged minimum wage increases.
In future, income tax on workers will not include performance bonuses and some other additional payments, according to an order issued by Finance Minister Aun Pornmoniroth on October 6.
The additional payments covered by the plan include cash payments for transportation costs to and from the workplace, meals, social security fund payments, health insurance and maternity care.
“In order to raise the standard of living and enhance daily work performances of workers, employees of all factories and enterprises, some bonuses that workers obtained from their work have to be excluded from being calculated with tax on salary,” the directive reads.
Ath Thorn, president of the Cambodian Labor Confederation, told VOA Khmer that the order was the result of lobbying from unions, adding that he thought the government’s decision was an attempt to “attract workers for political support”.
He added that unions have requested that all income be tax exempt for workers earning under 1 million riel (about $245), but they have not yet received a response.
In late September, a new minimum wage of $153 for 2017 was announced for workers in the garment sector, up from $140 at present.
Yang Sophoan, president of the Cambodian Alliance of Trade Unions, said that even with the announced tax exemption, workers would still be unable to “afford to live in dignity”.
Vong Sey Visoth, secretary of state at the Ministry of Economy and Finance, could not be reached.
The union leaders added that they wanted to see the government doing more to stymie inflation to keep the prices of basic goods low.
Unions Welcome Excluding Bonuses From Tax Calculations