Theme 2: Responsible Revenue Management

by

PHAN Phalla, Ph.D.Deputy Secretary General

Supreme National Economic Council

30 March 2010Sunway Hotel, Phnom Penh

Seminar on Governance of Extractive Industries in Southeast Asia: Managing Resources for Regional Prosperity

Content

1- Introduction

2- Measures for Responsible Revenue Management

3- Revenues from Mineral Resources and Oil

4- Capacity Building

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1- Introduction

• Resource sector is in infancy stage of development

• so far, small scales and artisanal mining for mineral sector

• No clear indication on oil sector yet

• Capacity still limited

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2. Measures

- RGC adopts the Principles of EITI: transparency and accountability, disclosure of revenue and public involvement

- Direct Transfer to Treasury Single Account

- Set up the Taxation Law on Petroleum

- Setting up inter-ministerial Working Group to mobilize and manage revenue from oil, gas and other mineral resources

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Inter-Ministerial Working Group

• Inter-ministerial working group has been established under the Public Financial Management Reform Program (PFMRP). It is govt’s Prokas and signed by Samdech Prime Minister of the Kingdom of Cambodia on 4th February 2009

• Members: Ministry of Economy and Finance, Council of Ministers, Ministry of Industry, Mine and Energy, Ministry of Planning, Cambodia National Petroleum Authority, Ministry of Environment, Council for the Development of Cambodia, Ministry of Commerce, Ministry of Land Management, Urbanization and Construction and Ministry of Interior.

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Mandate the Inter-ministerial Working Group

o Study on the institutional needs for the mobilization and management of oil, gas and other mineral resources

o Provide recommendation on the report preparation, implementation mechanism, accounting principle, auditing and other conciliations.

o Study and identify the parameters that have to be publicly reported and disseminated

o Study and define the oil revenue types and non oil, gas and other mineral resources

o Assess on the capacity building need for this working group and other stakeholders

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Tasks of Inter-Ministerial Working Group

• The working group will develop a joint understanding of the sector operations, terminology and operating conditions by CNPA, MEF (including General Department of Taxation), CDC, CoM and MIME, which is a prerequisite for implementing the collection and reporting of revenue.

• The disclosure of revenue streams and other payments coming from oil, gas, and mining companies in the TOFE and upload the TOFE in the MEF website.

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Tasks of Inter-Ministerial Working Group

• Conduct capacity development programs to the General Department of Taxation and other concerned Line Ministries to build and strengthen technical skills and capacity in auditing, reporting, reconciliation, evaluating and monitoring of extractive companies to ensure that revenue information (including tax and other payment to the government) reported by the petroleum and mining companies is correct.

• Establish an effective mechanism for information sharing among different revenue collecting agencies (i.e. General Department of Taxation, Non-Tax Department, General Department of Customs and Excise, MIME, CNPA, CoM and etc.) and the Policy Department of MEF to ensure timely and effective reporting of oil and gas, and mining earnings received by the Government.

• With a view to further increase transparency, options will be discussed to share information on the oil and gas, and mining sectors more broadly with NGOs, Development Partners, and other concerned stakeholders (including conduct regular consultation meeting between Government, Extractive Industry Companies and Civil Society Organizations)

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Outcome of the Inter-Ministerial Working Group

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• Have convinced meeting regularly• Study tour to other countries to study about the

report on revenue from oil, gas and mineral sector

• Revenue collection agencies need to be sent to MEF every month

• Setting up revenue template for all revenue collection agencies to use

• Disseminate the work plan to NGOs and member of parliament

• Setting up training• Disseminate revenue from oil and mineral sector

in TOFE on MEF’s website

Revenue Template

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Revenue Template (Cont.)

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3- Revenue from Mineral Resources

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Item descriptionFinancial Law

2009Revenue in 2009 (Million Riels)

Total 3,785.00 6,003.00

Export license fee 14.00 0.00

Local license fee 332.70 651.14

Mineral resource license fee 60.30 218.80

Mineral resource license extension fee 238.40 228.34

Mineral resource license transferation fee 34.00 204.00

Mineral concession and Registration fee 2,451.30 4,615.25

Mineral registration fee 17.30 62.40

Rent of conssesion land 2,434.00 4,552.85

Rental space for research fee 1,708.00 2,166.54

Rental space for mineral business fee 300.00 1,196.66

Stone and construction supplies fee 426.00 1,189.65

Other revenues 987.00 674.99

Mineral resources royalty 987.00 674.99

Revenue from penalties 0.00 62.21

TOFE

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Billions of Riels2009

C.B.L.Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09

I. DOMESTIC REVENUE 5,134.567 95% 4885.25 305.53 352.38 443.81 420.74 415.01 416.98 397.62 414.43 372.68 431.81 386.63 527.631

o w from mining sector (whole year) 6.003

o.w/ revenue from oil 0.000 0.00 0.31 0.88 1.63 1.04 1.08 1.06 0.00 0.00 0.00 0.00 0.00 3.32

1.CURRENT REVENUE 5,086.567 95% 4855.96 303.84 350.02 443.81 418.22 410.51 416.98 395.52 412.04 367.37 423.39 386.63 527.631 a. TAX REVENUE 4,276.948 97% 4155.18 273.83 274.77 398.79 367.67 365.87 363.00 340.84 331.95 326.52 356.70 339.76 415.474 Domestic tax revenue 3,154.468 98% 3090.91 197.15 207.28 307.60 298.18 269.91 270.61 250.87 247.38 233.38 250.98 248.67 308.897 On income, profits, capital gain - persons 147.216 113% 166.46 12.52 12.88 12.03 14.32 17.93 13.45 13.49 13.21 13.85 13.57 12.65 16.551 On income, profits, capital gain - companies 599.190 96% 576.40 47.21 29.72 102.69 102.79 34.46 26.79 33.74 25.06 36.00 42.17 38.48 57.286 General taxes on goods and services 1,578.967 94% 1477.44 95.27 101.37 131.05 110.46 140.96 152.59 117.18 135.16 109.41 113.60 125.93 144.450 o.w/ -Turnover taxes 15.360 110% 16.89 0.93 1.15 1.30 1.27 1.60 1.56 1.49 1.57 1.62 1.42 1.36 1.642 -VAT 1,563.607 93% 1460.55 94.34 100.23 129.76 109.20 139.36 151.03 115.70 133.59 107.79 112.18 124.57 142.808 Taxes on specific goods 657.940 110% 721.16 32.22 50.43 53.16 56.16 63.92 65.02 65.36 62.33 64.64 69.78 62.46 75.684 Taxes on specific services 155.106 83% 128.22 8.69 12.46 7.30 12.37 10.81 10.40 14.73 9.82 9.10 10.91 8.66 12.972 Taxes on goods and services or activities 1.399 1014% 14.19 0.63 0.04 0.78 1.64 0.55 1.34 5.70 1.26 0.08 0.66 0.13 1.378 Other tax revenue 14.650 48% 7.04 0.62 0.37 0.59 0.43 1.29 1.02 0.66 0.55 0.29 0.28 0.36 0.576 Taxes on international trade 1,122.480 95% 1064.28 76.68 67.49 91.19 69.49 95.96 92.40 89.97 84.57 93.14 105.72 91.09 106.577 Taxes and duties on imports 999.600 95% 948.95 49.85 65.64 76.20 67.15 80.05 85.80 83.58 74.77 85.51 99.46 83.57 97.385

o.w/ -Customs duties and taxes 541.200 88% 476.20 30.20 32.02 41.27 40.38 40.09 42.86 45.67 43.87 40.37 40.87 38.97 39.644

-Customs fees 60.720 44% 27.00 3.73 3.78 4.97 4.35 2.74 1.31 1.26 0.97 0.88 1.06 0.87 1.074 -Oil product duties 238.800 116% 277.34 9.68 18.49 18.90 13.96 23.40 25.17 22.89 18.33 25.74 35.31 27.04 38.431 -Additional tax on oil product - Road maintenance 150.480 108% 162.59 6.07 11.07 10.83 8.30 13.62 16.24 13.47 11.07 17.50 20.86 15.95 17.609 Taxes and duties on exports 122.880 94% 115.32 26.83 1.85 14.99 2.35 15.91 6.60 6.39 9.80 7.63 6.27 7.52 9.191 o.w/ -Customs duties on rubber exports 24.960 22% 5.53 0.85 0.37 0.30 0.23 0.17 0.41 0.71 0.57 0.26 0.61 0.56 0.487 -Duties on export quotas 3.360 0% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00b. NON TAX REVENUE 809.619 87% 700.78 30.01 75.26 45.01 50.55 44.64 53.98 54.68 80.09 40.85 66.69 46.87 112.157 Property income 124.785 52% 64.54 2.41 2.62 8.05 4.03 2.37 3.30 2.70 22.16 2.58 2.65 1.97 9.684 Rental income from land 36.575 117% 42.96 2.41 2.61 8.00 4.03 2.37 2.37 2.70 3.00 2.58 2.30 1.62 8.965 Revenue from public enterprises 88.210 24% 21.58 0.00 0.01 0.05 0.00 0.00 0.93 0.00 19.16 0.00 0.35 0.35 0.720 Sale of goods and services 507.115 80% 407.94 25.68 36.96 30.86 38.68 37.12 25.08 23.03 39.72 28.93 26.45 44.30 51.127 Market establishments 278.978 70% 195.89 11.11 24.14 11.71 18.22 21.96 9.28 7.25 21.54 13.37 11.70 25.04 20.575 Nonmarket establishments 12.555 114% 14.36 0.51 0.58 0.94 2.23 0.61 1.10 0.88 2.39 0.64 1.43 1.14 1.902 Administrative fees 198.198 92% 181.89 12.61 10.82 17.27 16.50 13.74 13.46 13.14 14.47 13.97 11.04 17.02 27.853

Implementation12months = 100%

taragRbtibtþikarhirBaØvtßúsaFarN³ qñaM 2009¼ TOFE: BUDGET IMPLEMENTATION FOR 2009

4- Capacity Building

• Capacity in all fields, engineers, taxation, geology, environment and others are critical for Cambodia to move forward.

• A number of courses have been prepared to improve the capacity of the government officials in MEF, CNPA, MIME, GDT and NDNT

- Fiscal Regime

- Product Sharing Agreement

- Oil and Gas Sector

- Oil and Gas Industry, 07-11, December 2009)

- Other courses

• Proposed to UNDP to have comprehensive capacity building plan

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Thank You