Cambodian tax system

I. General concepts of taxes
2
a - What are Taxes ?
- What are types of tax used by government?
- Why do governments impose taxes?
Taxes are compulsory contributions imposed by government on
individuals, corporations or institutions without any service rendered
to the taxpayer in return. People are taxed on what they earn
(income tax), on what they spend (consumption tax), and on what
they own (property and real estate tax). Taxes may be classified in
various ways.
Tax is a sum of money that a government take from people‘s
income, company profit, the sale of goods to be used for public
expending.

(continue/cont.)
b - Why tax ?
- Develop country (government need
money/revenue)
- Salary for government employees
- Security, defense
- Infrastructure (road, bridge, medical,
education, …)
- Park (gardens, Car parks,…)
3

I. General concepts of taxes (cont.)
c- Who pay tax ? (art.2,3 of LOT)
- People or person (legal person and physical
person)
- Resident person - worldwide income
- Non-resident person - Cambodian source
4

(cont.)
d - Sin tax for higher rate to:
- Cigarettes
- Alcohol
- Gambling
5

(cont.)
e- Domestic luxury taxes, imposed tax on
luxury goods such as:
- Luxury cars ( Land cruiser, Mercedes,
Lexus,…)
- Luxury wines (Hennessy, XO, …)
- Luxury perfume, shampoo,...
6

(cont.)
f - Policy tool :
- Take money from the rich people to help
poor people (progressive or higher tax
rate)
- Make influence people, equality
7

(cont.)
g - Policy tool : import tax , joint Asean ,
AFTA, reduce tax rate
- Promote domestic productions
- Protect domestic companies/ employees
8

(cont.)
h- Smuggling lead to losses on :
- Government revenue
- Domestic factories
- Employees (unemployment)
9

Salary tax
1- Who pay tax ?
- employees
- government officials
- private workers (BOD, officers, managers,
technical workers, sewing/cutting…)
- NGO workers (BOD, officers, managers,
technical guys, office workers, drivers…)
- public companies
10

Salary tax cont.
2. Who exemption:
- Diplomatic staffs = no tax
(diplomatic do work=not diplomatic= tax,
local staffs= not diplomatic= tax)
- International organizations ( non-profit,
charity…)
11

Salary tax cont.
3- How to pay tax?
- Government need money, employees
must be to pay according to the tax law
- Withholding of tax by the company (in
advance and pay to the tax department)
12

Salary tax cont.
4- When
- every month by before 15th day of the
following month
- For annual profit tax by before March
31th day of the following year.
- For VAT by before 20th day of the
following month
13

What is salary ?
• As stated in article 42 the term “salary” in this
Law means salary, remunerations, wages,
bonuses, and overtime, compensations and
fringe benefits which are paid to an employee,
or which are paid for the direct or indirect
advantage of the employee for the fulfillment
of employment activities
14

Salary is not :
• Expenses (reimbursed, spend for
employer,…)
• Per diem (normal, for work travel,…)
• Limit (government $10+15.000r/ day, abroad
$20/day, UN $100/ day)
• Severance (separate) exempt up to limit
required by Labor law
• Social Characteristics (pension, medical,…)
• Uniforms
• Dividend (USA no dividend)
15

Deductions
• Advance
• Child 0r Kids (14 years = yes, 25 years
= yes if still study
• Spouse yes if stay at home
• Sangsah = no (kids if dependent)
16

Computing Salary Tax
(Salary – Deduction) x Tax Rate = Salary Tax
17
0%
20%
10%
5%
15%
500,000R 8,500,000R1,250,000R 15,000,000R12,500,000R
1,250, 000
-500, 000
750,000 x 5%
= 35,500R
8,500,000
-1,250, 000
7, 250,000
x 10%
= 725,000R
12,500,000
-8,500,000
4,000,000
x 15 %
= 600,000R
15,000,000
-12,500,000
2,500,000
x 20%
= 500,000R

Main provisions for tax management and collection
• Constitution of the Kingdom of Cambodia
article 57 stated” tax collection shall be in
accordance with the law ”.
• Law on taxation of the kingdom of
Cambodia.
• Financial act. 1994,1995….2007.
• Other tax provisions (Sub-decree, Prakas,
Circular, Direction and Notification).
18

II. Summarize Cambodia Tax system
• The Tax Department in Cambodia operates under
three regimes (article 4) :
- (1)- real regime
- (2)- estimated regime
- (3)- simplified regime but not operative.
The real regime is carrying out the large enterprise
administration, and it collected over 80% of total tax
revenues, while estimated regime is applied on
small taxpayer. The number of tax officials is about
1,442. The organization chart of the Tax Department
is shown in Chart 1.
19

(1). The real regime
An enterprise is taxable under the real
regime (self assessment system), it
has three conditions:
a- Legal form of the enterprise: these
enterprises are mainly state own
enterprises, joint venture companies,
private companies, communities, or
private organizations doing activities for
profit of received income from their
assets.
20

(1).The real regime (cont.)
b- Level of turnover:
The enterprises who had annual taxable turnover
(included all taxes) is upper the amount:
- 500 million Riels in case of supply of goods;
- 250 million Riels in case of supply of services;
- 125 million Riels has any contracts with the
government.
21

c- Type of business activity:
a sole proprietorship which is an importer or
exporter or a qualified investment project.
For new enterprise: if the estimated level of
turnover, or if the type of business activity
(based on information recorded in the
application for permission to start business)
meets the conditions for real regime taxation as
stated in points b and c above.
22

• There are two types of tax units under the Large and
Medium Taxpayer Bureau (LMTB):
1- The Large Taxpayer Unit (LTU)
 The enterprise is paying tax under the LMTB and achieved
the annual turnover upper 1,000 million Riels is
subjected to pay tax at the LTU.
 Taxpayers under this unit have duties as follow:
- Self-assessment of taxes and submit tax return at tax
office
- Tax officer verifies on the tax return
- Pay tax amount at the National Bank of Cambodia
(NBC)
- Keep accounting record and other statements
- Keep the documents upon to ten years
23

2- The Medium Taxpayer Unit (MTU)
 The enterprise is paying tax under the LMTB and
achieved the annual turnover lower than 1,000 million
Riels is the subjected to pay tax at the MTU.
 Taxpayers under this unit have duties as follow:
- Self-assessment of taxes and submit tax
return at tax office
- Tax officer verifies on the tax return
- Pay tax amount at NBC
- Keep accounting record and other
statements
- Keep the documents upon to ten years
24

(2)- The Estimated Regime
Collection System: Applied for the small businesses,
their annual turnover lower than the above level, that
determined by the tax administration.
Estimated regime system taxpayers have the
obligations(article30):
1- The taxpayer subject to estimated regime system of
taxation must submit the tax declaration to the tax
administration every year by October 31, in the form
provided by the tax administration.
2- The amount of estimated profit is determined by the
tax administration after verification and consultation
with the businessman or his representative.
25

(2)- The Estimated Regime
(cont.)
This estimated profit is calculated according to the profit
rate with consideration to the type and activities of the
business which shall be determined by Prakas of the
Ministry of Economy and Finance.
3- This tax level on estimated profit shall be kept constant
for a period of 3 months, 6 months or 1 year.
4- The taxpayer subject to the tax on profit under estimated
regime system of taxation shall pay this tax every month
at the time fixed by the tax administration.
26

(3) Resident and Non residbbent
1- For a physical person, the term resident
taxpayer refers to any physical person who
has a residence, a principal place of abode,
or who is present in the Kingdom of
Cambodia for more than 182 days in any
period of 12 months ending in the current
tax year
27

(3) Resident and Non resident
2- A physical person is referred to as a non-
resident taxpayer, if he is not a resident
taxpayer but receives income from a
Cambodian source.
3-For a legal person, the term resident taxpayer
refers to an entity (a legal person), which is
organised or managed in, or has a principal
place of business in the Kingdom of
Cambodia;
4-An entity, which is not a resident entity, that
maintains a permanent establishment in the
Kingdom of Cambodia is referred to as a non-
resident taxpayer.
28

III. Outline of type of taxes
Tax on salary (Personnel Income Tax)-
art.40-51
(1). All salary incomes from employment
activities are liable to the monthly Tax On
Salary ( TOS ). Paragraph 1 of article 52 of
the Law on Taxation clearly states that the tax
is the debt of the physical person receiving
the salary. This tax shall be collected through
withholding by the employer at the time of
salary payment.
29

III. Outline of type of taxes
(2)- As provided in paragraph 8 of article 42 of
the Law on Taxation salary is broadly defined
to include all remunerations, wages, bonuses,
overtimes, compensations, and other
payments in cash or in kind which are paid to
the employee or paid for the direct or indirect
benefit of the employee for employment
services rendered by the employee except for
those payments
30

1. Tax on salary (Personnel
Income Tax) cont.
• Exemption and deduction:
• Diplomatic and consular; international organization
and agencies of technical cooperation.
• Members of national assembly and senate
• Indemnity for the layoff additional remuneration with
social characteristics; flat allowance for mission and
travel expenses. CR 75.000 is deducted from the
tax base for each minor dependent children and
housewife.
31

1. Tax on salary /Personnel
Income Tax (cont.)
• Rates:
• The progressive tax rate applied:
• from CR 0 - CR 500,000 0%
• from CR 500,001 - CR 1,250,000 5%
• from CR 1,250,001 - CR 8,500,000 10%
• from CR 8,500,001 - CR12,500,000 15%
• greater than - CR 12,500,000 20%
32

2. Tax on Profit (corporate income
tax)
I. The taxable Profit is the net profit obtained from
all the results of all type of operation realized by
the enterprise including capital gains from the
sale of various parts of the asset during the
operation or at the close of the business, as well
as income from financial of investment operation
and interest, rental, and royalties' income.
(art.7,8,20…)
33

2. Tax on Profit (article2)
II. Tax Base
Tax on Profit (TOP) is the debt of a
resident person on income from
Cambodian sources and income from
foreign sources, and the debt of a non-
resident person on income from
Cambodian sources.
34

2. Tax on Profit /corporate
income tax (cont.)
III. Exemption (art.9)
Incomes of Government institutes;
organization of religious, charitable,
science, literary, or education purpose;
labor organization, or any chamber of
commerce, industry, or agriculture; the profit
from the sale of agricultural produce,
interest expenses that the taxpayer had
paid or incurred the tax year to carry on
business.
35

income tax (cont.Art.20)
IV. Tax Rates:
- 20% for the profit realized by a legal person.
- 30% for the profit realized under an oil or natural gas
production sharing contract and exploitation of natural
resource including timber, ore, gold, and precious
stones.
- 9% for the profit of an incentive 5 years transitional
period to qualified investment project (QIP) after the
period of tax exemption,
- 0% for the profit of QIP during the period of tax
exemption.
36

income tax (cont.Art.20)
- Physical person (individual) is applied progressive
tax rate:
from CR 0 to CR 6,000,000 0%
from CR 6,000,001 to CR 15,000,000 5%
from CR 15,000,001 to CR 102,000,000 10%
from CR 102,000,001to CR 150,000,000 15%
greater than CR 150,000,000 20%
37

2. Tax on Profit (cont.)
V. Allowable Deductions (art. 11)
Allowable deductions shall be as follows:
1- Except as provided in articles 12 through 18 of this
law, expenses that are allowed as a deduction
include expenses that the taxpayer has paid or
incurred during the tax year to carry on a business.
2- Any rent, interest, compensation, payments, or fees
paid to an officer or director of an enterprise, a
partner, a member of a pass-through, a member of
the taxpayer’s family or other related person where
there is proof that the payment is for services
actually performed and to the extent that such
payment is reasonable.
38

3- Amounts paid on new buildings and
other tangible assets, permanent
improvements or betterments including
any construction or acquisition period
interest and taxes. These amounts are
to be recorded in the relevant asset
account and shall be deductible as
depreciation as provided in article 13 of
this law.
39

VI. Depreciation
VI. 1. Definition of Depreciation
Depreciation is the recording of the definitive
decrease in value of an asset as a result of use,
passing time, technical change, or other cause.
This is done by spreading the cost of the asset
over the planned duration of its use (useful life)
in accordance with a schedule of depreciation.
VI. 2. For the purposes of TOP, to be deductible, the
depreciation must meet 5 conditions as follows:
40

a- it must be made only on a fixed asset recorded in the
balance sheet of the enterprise;
b- it must be made only on a fixed asset subject to
depreciation;
c- it must be made on the basis and within the scope of
the cost price;
d- it must be calculated with the straight-line method of
depreciation for class 1 assets or the declining
balance method of depreciation for class 2, 3 and 4
assets;
e- it must be made actually by the enterprise..
41

VI.3. Depreciation of tangible property:
VI.3.1. Normal Depreciation
All tangible property shall be divided into the following classes of
depreciations :
Class 1: Buildings and structures including their basic
components. Rate of depreciation 5 percent Straight
Line method.
Class 2: Computers, electronic information systems, software
and data handling equipment. Rate of Depreciation 50
percent Declining Balance method.
Class 3: Automobiles, Truck, and Office Furniture and
Equipment. Rate of Depreciation 25 percent Declining
Balance method.
Class 4: All Other Tangible Property. Rate of Depreciation 20
percent Declining Balance method.
42

VI.4. Depreciation of Intangible Property
For intangible property including patents,
copyrights, drawings, models, and franchises,
having a limited life the depreciation rate on
each property shall be calculated on the life
of that property according to the straight line
method of depreciation. If the life of the
intangible cannot be determined the annual
depreciation deduction shall be at the rate of
10 percent of the value of the intangible
property.
44

VI.5. Depletion of natural resources shall be determined as
follows:
The allowance for the depletion of any natural resource,
including any oil and gas, shall be determined as follows.
a. All exploration and development costs, including interest
attributable to these costs, shall be added to the asset
account of the resource.
b. The amount of the depletion for each natural resource
deductible for the tax year shall be determined by
multiplying the balance of the account for the natural
resource with the ratio of the quantity produced from the
natural resource during the year to the estimated total
production from the natural resources.
45

VII. Not Allowed as Deductions
1- Any expense on activities generally considered to be
amusement, recreation, or entertainment or the use of any
means in connection with such an activity.
2- Personal living or family expenses except for fringe benefits in
cash or in kind subject to withholding tax according to the
provisions for the Tax on Salary,
3- Any tax imposed by the provisions for the Tax on Profit or
withholding tax imposed by the provisions for the Tax on Salary.
4- For the loss on any sale or exchange of property, directly or
indirectly, between related persons.
5- For any expense except for expenses already incurred and for
which the taxpayer can establish the amount of the expense,
and the business purpose of the expense in a manner as above
(allowed deductions).
46

VIII. Tax on Insurance Companies (art. 16)
The tax on an insurance company shall be determined as follows:
1- For an enterprise having principal activity in the insurance or
reinsurance of life, property, or other risks, the tax on profit shall
be determined as follows:
a. 5 percent of the gross premiums received in the tax
year for the insurance or reinsurance of risk in the
Kingdom of Cambodia,
b. according to the rates in article 20(New) of this law
for other of activities that are not insurance of
reinsurance.
2- The rules and procedures for the payment of the tax on profit for
an insurance company shall be determined by Prakas of the
Ministry of Economy and Finance.
47

3. Withholding Tax
(art.25-27)
• Any resident payer making any payment in
cash or in kind to a resident person shall
withhold, and pay as tax, an amount
according to the below mentioned rates
which are applied to the amount paid
before withholding the tax.
48

3. Withholding Tax (Cont.)
1. The rate of 15% on:
- income received by a physical person from the
performance of services including management,
consulting and similar services.
- royalties for intangible properties and interest in minerals.
- interest of company paid to physical person or an
enterprise.
2. The rate of 10% on the income from the rental of movable
or immovable property.
3. The rate of 6% on interest paid to resident taxpayer having
a fixed term deposit account.
4. The rate of 4% on interest paid to resident physical person
having a non-fixed term saving account.
5. The rate of 14% on any payment of Cambodian source
income to non-resident.
49

4. Prepayment of the
profit tax (art.28):
• real regime taxpayers including qualified
investment project (QIP) has obligation to
pay monthly prepayment at the rate of
1% of turnover. This prepayment will
deducted from the tax on profit at annual
liquidation of the tax.
50

5. Value Added Tax (VAT)
(art.55-84)
• From January 01, 1998 value added tax (VAT) was
implemented and replace turnover tax. Taxpayer in
self assessment system has obligation to pay VAT
when making supply of goods and services to
consumer.
• The term “good” means tangible property other than
land or money; and the term “service” means the
provisions of something of value other than goods,
land, or money.
51

5. Value Added Tax (cont)
• Exemption and Deduction:
• Exemption are applied to public postal service;
hospital service; state own transportation, insurance;
primary financial services, the importation of articles
for personal use; non profit activities in the public
interest, foreign diplomatic international organization.
• Rates:
• Single rate, 10% and 0% rate for export.
52

6. Turnover Tax (art. 86)
• This tax is applied to those subject in
the estimated regime (those are not
subject to VAT). Turnover tax has to pay
monthly at 2% rate and may be fix in
advance for period of 3, 6,12 months.
53

7. Excise Tax (art. 85)
• Excise tax is applied to the implementation of
domestic production that apply to the specific tax
certain goods and services.
• Rate:
• 30% for automobiles of more than 2000 cc, and
their spare parts;
• 20% for petroleum productions and automobiles
of up to 2000 cc, and their spare parts;
• 10% for all type of beverages, tobacco, wines,
beers, and other establishment services, and all
type of motor vehicles (125cc).
• 3% for international telecommunication service.
• 2% for air tickets.
54

8. Property Transfer Tax
• Property Transfer Tax is applied to all
property transfer such as constructions,
lands, houses, all kind of cars, all kind
of motorbikes, boards, ships ...etc when
transfer and at the rate of 4% of the
transfer value.
55

9. Minimum Tax (art. 24)
• This tax is payable by a taxpayers
subject to the real regime system,
except the QIP has been granted the
status of an incentives. This tax is
imposed at the rate of 1% of the annual
turnover (loss or profit) inclusive of all
taxes except VAT.
56

10- Tax on capital gain
• Tax on capital gain will apply to
each physical persons with
progressive rate ( as profit tax for
physical persons article 20 of LOT)
of total profit when selling
immovable property as stated in
article 7 new of LOT.
57

10. Local Taxes:
(1)-Paten tax is levies with reference to
prior year turnover or estimated
turnover.
(2)-slaughter tax, rate 3%
(3)-transportation tax,
(4)-public lighting tax (3% on supply wine
and cigarettes which are imported
foreign products),
58

10. Local Taxes: cont.
(5)-Unused land tax is 2% rate on market
value of the land per m2.
(6)- Stamp Tax is to paid on certain official
document
(7)- Accommodation tax will implement in
Jan. 1st,2007 with rate 2% on hotels and
quest houses.
59

11. Sources of income
1. interest paid by a resident enterprise or
resident pass-through, or a
governmental institution of the Kingdom
of Cambodia;
2- dividends distributed by a resident
enterprise;
3- income from services performed in the
Kingdom of Cambodia;
4- compensation for management and
technical services paid by a resident
person;
60

11. Sources of income (cont.)
5- income from movable or immovable property, if
such property is situated in the Kingdom of
Cambodia;
6- royalties from the use, or right to use intangible
property paid by a resident, or paid by a non-
resident through a permanent establishment
that he maintains in the Kingdom of Cambodia;
7- gain from the sale of immovable property located in
the Kingdom of Cambodia or from the transfer of
any interest in immovable property situated in the
Kingdom of Cambodia;
61

11. Sources of income (cont.)
8- premiums from the insurance or reinsurance of risks
in the Kingdom of Cambodia.
9- gain from the sale of movable property which is part
of the business property of a permanent
establishment maintained by a non-resident taxpayer
in the Kingdom of Cambodia.
10- income from business activities carried on by a
non-resident through a permanent establishment in
the Kingdom of Cambodia;
All income that is not Cambodian source of income is
treated as foreign source of income.
62

12. Foreign Tax Credit (art.36)
• A resident taxpayer who has received income from
foreign sources and who has paid taxes according to
foreign tax law shall receive a tax credit for deduction
from the tax on profit to be paid in the Kingdom of
Cambodia under the condition that there is
presentation of documents confirming this tax
payment abroad.
• In order to calculate the tax to be paid in the Kingdom
of Cambodia before deduction of this tax credit, the
total amount of income received from Cambodian
sources and foreign sources shall be taken into
account.
• The tax credit is determined separately for the tax
paid by a Cambodian resident in each foreign
country.
63

13. Requirement to Register
A person must register with the tax administration within
15 days after the person begins economic activity.
For the application for registration, it must be attached
with the following documents:
1- For a legal person enterprise:
- business certificate issued by competent authorities
of which the stamp tax has been paid;
- letter of authorisation issued by the CDC (for QIP);
- articles of incorporation of the enterprise;
- identity card of the leadership (with photos);
- business address certificate and eventually contract
for the leasing of the enterprise compound.
64

13. Requirement to Register
2- For a sole proprietorship:
- business certificate issued by competent authorities;
- identity card of the owner (with photos);
- domicile certificate;
- family certificate;
- headquarters address certificate and eventually
contract for the leasing of the enterprise compound.
A person shall inform the tax administration within 15
days of any change in the address, form, name, or
object of the business, the transfer or cessation of the
business, the leadership or the person in charge of
tax matters of the enterprise
65

III. Rights and Obligations of
the Taxpayer
The rights and obligations of the taxpayer shall be as
follows:
1- The taxpayer has the rights as follows:
a. to be considered as confidential and used only for the
purposes specified in ax provisions all information
related to his activities which are provided to he tax
administration as stated in article 94 of this law;
b. to regularly receive information concerning the process
of tax system and procedure in tax assessment as stated
in articles 96 and 118 of this law;
66

the Taxpayer (cont.)
c. to receive information about one's own rights
including the rights to appeals stated in articles
118 and 122 of this law;
d.to appeal as stated in this law to every decision
made by the tax administration as stated in
articles 118 and 122 of this law;
e.to pay no more tax than what is required by tax
provisions as stated in article 107 of this law.
67

2- The taxpayer has the obligations as follows:
a. register with the tax administration as stated in article
101 of the law;
b. to submit the tax declaration and provide information as
required by tax provisions as stated articles 98 and 104
of this law;
c. to pay taxes according to the schedule as stated in tax
provisions;
d. to maintain books of account, supporting documents,
and other documents and to show them to the tax
administration as stated in tax provisions and article 98
of this law;
68

e.to present oneself to the tax administration
according to the date as stated in he letter of
notification of the tax administration as stated in
article 99 of this law;
f. to pay various taxes, additional taxes, and
interest as determined by the tax administration
according to the date as stated in the tax
provisions or as notified by the tax administration
in writing as stated in tax provisions and articles
107, 130, 131, and 132 of this law.
69

IV. Powers and Obligations of
the Tax Administration
I. The power of the tax administration includes the
following:
1-to assess the tax base of the taxpayer or the
withholding agent as stated in articles 116 and
117 of this law;
2-to request the presence of the taxpayer or the
withholding agent as stated in article 99 of this
law;
70

IV. Powers and Obligations of the
Tax Administration (cont.)
3- to determine the necessary books, documents, and
supporting documents that the taxpayer or the
withholding agent must maintain and provide to the tax
administration as stated in articles 98 and 100 of this
law;
4- to require the taxpayer or third person to provide
information related to the taxpayer or withholding agent
as stated in article 99 of this law;
5- to enter the residence or the business establishment of
the taxpayer, the withholding agent, or a third person to
obtain information related to the taxpayer or the
withholding agent as stated in article 100 of this law;
71

6-to receive from state institutions information
concerning or related to the taxpayer or the
withholding agent as stated in article 116 of this
law;
7-to apply recovery measures to the taxpayer or
the withholding agent when the person fails to
pay various taxes, additional taxes, and interest
as required by this law as stated in articles 109
through 115 of this law;
8-to redetermine transactions between related
taxpayers as stated in tax provisions.
72

II. The tax administration has the obligations as
follows:
1- to collect taxes, additional taxes and interest
as stated in article 93 of this law;
2- to maintain confidentiality of information that
the taxpayer or a third person has provided and
communicate this information only to the person
as determined by tax provisions as stated in
articles 94, 128 and 138 of this law;
73

3- to provide information to the taxpayer or to
the withholding agent to ensure proper
implementation of tax provisions as stated in
article 96 of this law;
4- to refund or credit overpaid taxes as stated in
tax provisions;
5- to provide a letter of notification for tax
assessment to the taxpayer or to the withholding
agent as stated in articles 116 through 118 of
this law;
74

V. Tax Declarations
1- The taxpayer or withholding agent must
submit a tax declaration to the tax
administration according to the form, the
time and the place determined by the tax
administration.
2- The tax declaration must be signed by
the taxpayer or his legal representative.
75

V. Tax Declarations (cont.)
3- All investors shall file a monthly tax
return for each month and an annual tax
return for that tax year, and pay all taxes
payable as required by each tax
provisions.
4- All investors shall attach a CDC
Certificate of Compliance to the annual
tax return for that tax year.
76

V. Time of Tax Declarations
I. Monthly tax return:
1. For (1)- Salary tax, (2)- prepayment tax, (3)-
excise tax (4)-withholding tax (5)-
accommodation tax and (6)- Public lighting tax
shall be filled tax return and pay tax by before
15th day of the following month.
2. For VAT shall be filled tax return and pay tax by
before 20th day of the following month.
77

V. Time of Tax Declarations (cont.)
• Annual tax return:
1. For patent tax and stamp tax shall be filled
tax return and pay tax by before 31th
March of the current tax year.
2. Profit tax shall be filled tax return and pay
tax by before 31th March of the following
tax year.
78

VI- Additional tax and Penalty
A- Obstructing the implementation of tax provisions
includes:
1- In the case where the person:
a. fails to maintain proper records of account and other
documentation or fails to issue invoices on
transactions;
b. fails to allow the tax administration access to records
of account and other documents;
c. fails to register with the tax administration;
d. fails to notify the tax administration of any change in
the registration as stated in this law;
e. makes or furnishes fraudulent records, documents,
reports, or other information;
f. conceals or deliberately destroys accounting papers,
records, documents, reports or other information;
Siem Reap Tax Branch 79

VI- Additional tax and Penalty (cont.)
g. attempts to obstruct the assessment or the
collection of taxes;
h. fails to submit a nil tax declaration within 30
days of the date required by law;
I. willfully supports any of the above acts.
2- In the case where an tax official of the
government:
a. discloses confidential information without
authorization;
b. attempts to obstruct the assessment and the
collection of taxes;
c. willfully supports any of the above acts.

B- Additional tax:
a. For the obstruction:
- two million Riels for a person or a taxpayer or a
withholding agent under the real regime system of
taxation or a government official;
- five-hundred thousand Riels for a taxpayer or a
withholding agent under the estimated regime system of
taxation.
b. For underpayment of Tax:
- ≥ 10% → additional tax 10% + interest 2%/month
- < 10% → additional tax 25% + interest 2%/month
- Unilateral → additional tax 40% + interest 2%/month

c. For late tax payment:
- Fails to pay tax by the due date
→ additional tax 10% + interest 2%/month
- Fails to pay tax within 15 days after receiving a reminder letter
→ additional tax 25% + interest 2%/month
- Unilateral → additional tax 40% + interest 2%/month.
- Tax on transportation and Means → additional tax 100%

d. Penalty = criminal violation for:
- Tax evasion:
→ fine 10 000 000 – 20 000 000Riels
→ imprisonment 1 – 5 years or both.
- obstruction:
→ fine 5 000 000 – 10 000 000Riels
→ imprisonment 1month – 1 years or both.

Cambodia Tax Revenue in Percent of GDP 1997-2004
Type of taxes 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Direct Taxes 0.5 0.5 0.7 1.0 0.9 0.8 0.9 0.8
1- Profit 0.4 0.4 0.5 0.6 0.8
2- Salary 0.06 0.08 0.09 0.12
3- Rental tax
Indirect tax 2.3 2.4 3.8 4.2 4.9 4.1 3.7 4.6
1. Excise tax 0.7 0.8 0.7 1.0 1.8
- Domestic 0.1 0.2 0.1 0.2 0.2
- Import 0.7 0.6 0.7 0.8 1.6
2. VAT 207 3.1 3.0
- Domestic 0.4 0.6 0.6
- Import 2.5 2.7 2.4
3. Trade tax 3.8 3.6 3.8 3.3 2.7 2.6 2.3 2.7
Total tax
revenue
6.5 6.5 8.4 8.6 8.7 7.8 7.0 7.7 7.6 8.0
84

Current Cambodian tax system
reform
1- TCAP (2002-03)
• Law on Investment
• Law on Taxation 18 articles
• Prakas the tax on profit
• Prakas the tax on salary…
• IT system in Large & Medium taxpayer
Bureau
85

Current Cambodian tax system
reform Cont.
2- PFM (Public Finance Management)
- Reduce threshold for increase number of
taxpayer in self assessment system
- Expanding tax base (salary tax in private
institutions, Accommodation tax, Property tax …)
- Double taxation Agreement
- Audit circulars
- Taxpayer services
- Improve IT system
86

87
ORGANIZATION CHART OF THE TAX
DEPARMENT
Personnel &
Training
Bureau
Taxpayer
Service
Bureau
Enforcement
Collection
Bureau
Audit Program
Management Bureau
Collection &Data
Processing Bureau
Large and Medium
Taxpayer Bureau
MTU LTU
Tax payer
Service
Return
Processing
(Verifying)
Field Audit
Collection
Tax Arrears
Taxpayer
Service
Field Audit
Collection
Tax Arrears
Inquiry & Cross- Checking
Bureau (Investigation)
Enterprise Tax Audit
Bureau
Sel-assessment tax
collection Division
Provincial & Cities Tax
Branches
Tax Accounting
Districts tax Division
Administration-
Finance Bureau
Secretary Assisted by 5 deputy directors
(Power Delegating)
Return
Processing
(Verifying)
IT Bureau
DIRECTOR
Litigation
Bureau
Tax Policy &
Legislation
Bureau
Operational Level
Central Level
Personnel & admin/
finance Division
Litigation Division
Registration Division

Customs and Excise
I. Mission:
- Monitoring and collect taxes and other fees
on goods when make import and export.
- Prevention and enforcement on smuggling
- Making convenient to international trade
- Prevention economic and trade advantage
88

Customs and Excise Cont.
II. Obligation:
- collect taxes and other fees on goods when
make import and export as follow:
- 1. Customs duty
- 2. Value added tax
- 3. Specific tax or Excise tax
- 4. other fees
89

III. Powers:
-1. Check up and temporary stop
-2. Check up in residency
-3. special rights to check on document
-4. Check up on telecom list
-5. Righting to compromise and adjust a
penalty before sending to the court.
90

• Establish for taxes evaluation and
collection during import and export.
• Objective to inspect on goods
(transportation, stock, smuggling) and to
implement on international trade policy.
• Import and export taxes rate as stated
in customs tariff.
91

Example
T and D rate in %
Description of Goods
Unit
Imp
.
Exp
.
Ref
.
CD ST VAT ET
Wheeled toys designed to be ridden by children (for
example, tricycles, scooters, pedal cars); dolls'
carriages.
- Tricycles value 7 0 10 0
- Other wheeled toys value 7 0 10 0
- Dolls' carriages value 7 0 10 0
- Parts :
- - Spokes, for subheading 9501.00.10 value 7 0 10 0
- - Nipples, for subheading 9501.00.10 value 7 0 10 0
- - Other, for subheading 9501.00.10 value 7 0 10 0 92

• No import:
1. Drugs such as heroin
morphine…(Singapore is death)
2. Some goods that effected to: Security,
discipline, environment, art and ancient.
in order to Concession on arts and ancient
such as Angkor…
93

Cambodian tax system

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