At the Eurocham Tax Forum this presentation covers Small Taxpayer registration in Cambodia and issues small taxpayers are currently facing. As a clarification, the GDT representatives in the audience stated Small Taxpayers should issue Commercial Invoices and there is no input credit for goods and services charged by Small Taxpayers, i.e. registered taxpayers can not claim a vat credit on an invoice from small taxpayers.

1. SMALL TAX
PAYER ISSUES
October 12th, 2017
Anthony Galliano
Group CEO of Cambodian Investment Management,
GROUP, CEO of Cambodian Investment Management,
Chairman of Cambodian Investment Management
Insurance Agent, Phnom Penh BG Serviced Offices,
Premium Human Resources, Jump Digital (Cambodia) and
Dynamo Digital.

2. SMALL TAXPAYER ISSUES
Anthony Galliano, Group CEO of Cambodian Investment Management Group
CEO OF CAMBODIAN INVESTMENT MANAGEMENT,
CHAIRMAN OF PHNOM PENH BG SERVICES OFFICES,
PREMIUM HUMAN RESOUCRES, CAMBODIAN
INVESTMENT MANAGEMENT INSURANCE AGENT,
DYNAMO DIGITAL AND JUMP DIGITAL - CORPORATE AND
INVESTMENT BANKER FOR 27 YEARS WITH CITIBANK AND
ANZ (N.Y., U.K., BELGIUM, H.K., THAILAND, INDONESIA,
CAMBODIA) - DEGREE IN ACCOUNTING, DIPLOMA IN
CAMBODIAN TAX, PASSED NASD LICENSES FOR GENERAL
SECURITIES REPRESENTATIVE, GENERAL SECURITIES
PRINCIPAL, UNIFORM STATE LAW, and REGISTERED
INVESTMENT ADVISER.

3. SMALL TAXPAYER ISSUES
Where did it all Started
• The Law on Financial Management 2016 promulgated on the 17th
of December 2015 (Royal Kram No. NS/RK/1215/016), abolished
the Estimated Regime of Taxation and restructured the Self-
Assessed Regime (Real Regime) into Small, Medium and Large
taxpayers
• Prakas no. 1820 MEF.Prk dated 25 December 2015 “Method and
Procedure on Implementation of Simple Accounting Record for
Small Real Regime Taxpayers”, Small taxpayers are able to follow
a simplified accounting system

4. SMALL TAXPAYER ISSUES
Small taxpayers are Sole Proprietorships or Partnerships that:
- Have annual taxable turnover from Khmer Riel (“KHR”)
250 million (USD62.5k) to KHR700 million (USD175k);
- Have taxable turnover, in any period of three consecutive
calendar months (within this tax year), exceeding 60
million KHR (USD15k);
- Expected taxable turnover of 60 million KHR (USD15k) or
more in the next three consecutive months;
- Participate in any bidding, quotation or survey for the
supply of goods and services including duties.

5. SMALL TAXPAYER ISSUES
Simplified Accounting Format:
Purchase Day Book, Goods for sale or for supplying services, Fixed assets,
Raw materials, Wages and salaries. Utilities, Rental, and Other expenses
Sale Day Book. Record all daily transactions of supplying of goods or
services following each invoice if the selling price is high. Record as total
daily sale when retail goods or numerous types of goods are on a single
invoice or lower price
Inventory Book Calculation of historical cost of goods sold or used for
supplying of services

6. SMALL TAXPAYER ISSUES
Proposed Advantages
- Charge VAT at 10% of Sale and Pay 2%
- Withholding Tax on Rent only, not to non-registered taxpayers
providing services
- Simplified 1 page versus 4 page Tax Return, schedules still
required
- Cheaper incorporation costs with Department of Commerce
- Tax Patent USD 100 versus USD 300 for Medium and USD 750 or
USD 1,250 for Large
- Profit Tax is tiered before reaching the 20% level

7. SMALL TAXPAYER ISSUES
FORMING A SOLE PROPREITORSHIP/SMALL TAXPAYER
- Department of Commerce
- Sangkat
- Tax Branch

8. SMALL TAXPAYER ISSUES
FORMING A SOLE PROPREITORSHIP/SMALL TAXPAYER
Department of Commerce
- Passport/ID with fingerprint in blue ink (preferred)
- Foreigner, unexpired Visa
- Lease (registered business address)
- Photo of building 10 cm by 15 cm
- Photo of Owner 4 by 6 cm
- Company Name and Activity, no name check
RECEIVE CERTIFICATE OF INCORPORATION

9. SMALL TAXPAYER ISSUES
FORMING A SOLE PROPREITORSHIP/SMALL TAXPAYER
SANGKAT
- Lease has to be in Khmer
- Signed or Fingerprinted
- Complete Application or Form (some Sangkats)
- Obtain Stamp
- Pay Fee (very variable by Sangkat)

10. SMALL TAXPAYER ISSUES
FORMING A SOLE PROPREITORSHIP/SMALL TAXPAYER
Tax Registration
- At Tax Branch
- Complete Application Form S 01
- Owner Photos 35mm by 45mm
- Passport or ID (signed or fingerprint)
- Lease and Certificate of Incorporation
- Property Number of the Registered Business Address
- ONLY SOME tax branches will require a tax filing and payment
of withholding tax on rent as of lease start date

11. SMALL TAXPAYER ISSUES
FORMING A SOLE PROPREITORSHIP/SMALL TAXPAYER
Tax Registration (continues)
- Information processed at Tax Branch, sent to GDT, and if all is
ok, the tax registration docs are send back to the branch
- Upon payment a number a TIN is immediately given
Receive Tax Patent, VAT Certificate, Tax Registration Card, and
Instruction to File

12. SMALL TAXPAYER ISSUES
Issues with Small Taxpayers
- Registration of Partnership with the DOC is virtually
impossible, therefore multiple shareholder Small Taxpayers are
not possible. Limited Liability companies must be a Medium
Taxpayer
- Confusion regarding VAT. Large and Medium Taxpayers are
refusing to accept VAT charges from Small Taxpayers, saying they
can not claim the VAT.

13. SMALL TAXPAYER ISSUES
Issues with Small Taxpayers
- Small Taxpayers can not claim VAT even if they are
charged, Medium and large taxpayers have to
consider the VAT as an output and other Small
Taxpayers pay 20% of the 10% VAT. Is VAT therefore
still a consumption tax in this case?
- Some tax branches are saying the charge 10%/pay 2%
VAT only applies to goods not services

14. SMALL TAXPAYER ISSUES
Issues with Small Taxpayers
- Tax registration is taking extraordinarily long, the taxpayer
registers at the branch, processing is done at GDT, and
returned to the branch, then to the taxpayer eventually.
- When Patents are available and issued, they are not delivered
and you must constantly follow-up with the tax branch to see
if ready. There is a risk of missing the first filing.

15. SMALL TAXPAYER ISSUES
Issues with Small Taxpayers
- Although a taxpayer may file for a small taxpayer, even in the
case of brand new company, with no history, the GDT may at
its own discretion decide the taxpayer is medium.
- When using certain business activities such as “consulting”, the
tax registration may be moved inexplicably to Medium.

16. SMALL TAXPAYER ISSUES
Issues with Small Taxpayers
- At some point small taxpayers had to pay USD 100 for a USD
currency license and then is was stopped. So some
registration paid extra.
- There was confusion whether small taxpayer received VAT
certificates or not.
- It appears being a Small Taxpayer is only advantageous if
dealing with Consumers as Customers.

17. QUESTIONS AND THANK YOU.