Look for non-tax compliant lenders, GDT asks NBC

The General Department of Taxation (GDT) has called on the central bank to crack down on two lenders who have been promoting their services on social media despite non-compliance with tax rules.

The request, involving Happy Loan Cambodia Co Ltd and Tiger Loan, comes days after the National Bank of Cambodia (NBC) issued a public warning on August 25 regarding advertising and other types of solicitation of illegal and deceptive lending businesses and practices.

The GDT notice, signed by its General Manager Kong Vibol and dated August 31, revealed that Happy Loan Cambodia “has registered for tax purposes, but company details are not up to date and have not declared their taxes,” while Tiger Loan “has done so has failed to meet its tax registration requirements”.

Actions by NBC would “strengthen compliance with the Tax Code and the Banking and Financial Institutions Act [LBFI]to improve the business environment and ensure fair competition, and in particular to promote the effective and efficient implementation of the law,” said the department, which reports to the Ministry of Economy and Finance.

The Post could not reach any of the lenders for comment at press time.

Notably, however, Tiger Loan says on its Facebook page that it offers nationwide “quick and easy” unsecured loans starting at $50, with “simple paperwork” and “100 percent customer confidentiality guaranteed.”

Speaking to The Post on September 5, Cambodia Microfinance Association (CMA) spokesman Kaing Tonngy emphasized that legitimate online lenders operating in the Kingdom are those affiliated with NBC or Non-Bank Financial Services Authority (NBFSA) of the Treasury Department.

These lenders are regularly monitored by the authorities and have clearly defined addresses, business activities and customer protection policies, he said.

“What we have seen on social media are mainly illegal operations run by different groups. We have seen a significant increase in these illegal online lending schemes since the start of Covid-19 when many people were short of cash.

“Unfortunately, we have also seen many fall victim to online lending. These illegal operators charge ridiculously high interest rates, cheat their customers, fail to adhere to customer protection principles, use intimidation and violence, and often result in over-indebtedness,” he added.

In its precautionary Aug. 25 press release titled “Advertising and Illegal Lending,” NBC said the banking and financial institutions it licenses to conduct business include: commercial and specialty banks, microfinance institutions regardless of deposit status, financial leasing companies, and rural credit institutions.

These institutes provide loans and other relevant services to companies, corporations and individuals. They are under the control of NBC and their customers are protected by law.

However, NBC warned that it has observed some nefarious actors openly promoting loans through various mediums, including online ads, on social media, or through leaflets and flyers in public places. Lending by these unlicensed companies or individuals is against the law, particularly the LBFI.

“In order to avoid fraud or other consequences of obtaining informal credit and to maintain stability and public confidence in the banking system, we call on the public to exercise heightened caution and encourage them to seek the services of formal institutions.”

“We condemn all forms of informal information dissemination and lending. In the meantime, we are working with authorities to take legal action against any company or individual engaged in illegal activity,” the letter added.

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