Siem Reap Tax Forum (Eurocham Cambodia and GDT)

AGENDA
08:00 Opening Remarks
08:30 COFFEE BREAK
09:00 Update on tax recent
development
09:30 Simplified Accounting
for Small Taxpayers
and Issues for Small
Taxpayers
10:20 Panel Discussion on
Tax Recent
Development,
Simplified Accounting
and Issues for Small
Taxpayers
12:00 LUNCH
01:30 Industry specific tax
regime: tourism &
hospitality
02:00 Tax for non-profit
02:30 Panel Discussion on
industry specific tax
regime: tourism &
hospitality and Tax for non-
profit
04:00 Wrap-up & Closing
Remarks
04:10 COFFEE BREAK &
NETWORKING EVENT

Chairman of EuroCham
MR. ARNAUD DARC
OPENING REMARKS
Delegate of the Royal
Government in charge as
Director-General of the General
Department of Taxation
H.E. MR. KONG VIBOL

MR. ARNAUD DARC
Chairman, EuroCham
A French entrepreneur, Mr. Darc first arrived to
Cambodia in 1994 and subsequently co-
founded the Amanjaya Pancam Hotel, KWest
restaurant in Phnom Penh. From 2006 to 2009,
he became a Partner and Managing Director
of two CityStar Investment Fund Companies. He
was President of the French-Cambodian
Chamber of Commerce in 2014 and 2015 and
serves as the Executive Treasurer of the
Cambodia Tourism Federation. Mr. Darc is
currently the Chief Executive Officer of Thalias
Group, employing over 400 people. Arnaud
Darc has been awarded the title of Knight of
“l’Ordre national du Mérite” by the French
government. He is Chairman of EuroCham
since 2016.

H.E. KONG VIBOL
H.E. Mr. Kong Vibol was Secretary of State at
the Ministry of Economy and Finance and
Vice Chairman of the Council for the
Development of Cambodia for several
mandates. H.E. Mr. Kong Vibol was
educated in Australia and graduated from
Swinburne University of Technology with a
degree in financial accounting and
economics.
Delegate of the Royal Government in charge as Director-General of the General Department of Taxation

UPDATE ON
TAX RECENT
DEVELOPMENT
MS. CHHIV KIMSROY
Chairwoman of EuroCham Tax Committee,
Tax and Advisory Services and M&A Leader,
Deloitte

Kimsroy has many years’ experience in
providing tax and consulting services in
Cambodia including tax due diligence for M&A
and restructurings, tax structuring advice on
business operations and corporate structure to
optimize clients’ tax position in Cambodia; and
performing tax compliance reviews. She has
extensive experience in assisting clients with
their tax audits and resolving disputes with the
tax authorities.
MS. CHHIV KIMSROYChairwoman of EuroCham Tax Committee, Tax and Advisory Services and M&A Leader, Deloitte

• TAX INCENTIVES FOR SMALL AND MEDIUM ENTERPRISES (SME) (Sub-
decree No. 17 dated 7 Feb 2017)
• WHT ON DIVIDEND DISTRIBUTIONS (Prakas 518 MEF dated 05 May
2017)
• UPDATED NON-TAXABLE SUPPLIES and VALUE ADDED TAX (VAT) ON
PRIMARY FINANCIAL SERVICES (Prakas 559 MEF dated 25 May 2017
and Notification GDT 11278 dated 06 July 2017)
CONTENTS

• BRANCH TOP AND WHT (Prakas 577 MEF dated 07 June 2017)
• MINISTRY’S CLARIFICATION OF CONDITIONS FOR MINIMUM TAX
EXEMPTION (Prakas 638 MEF dated 04 July 2017)
• TRANSFER PRICING GUIDELINES (Prakas 986 MEF dated 10 October
2017)
• IMPLEMENTATION OF WHT ON INTEREST OF MFI’S OVERSEAS LOAN
(Prakas 1129 MEF dated 27 October 2017)
• NEW TAX ON SALARY THRESHOLD FROM 1 JAN 2018 ONWARD
(Instruction 002 dated 15 Jan 2018)
CONTENTS (CON’T)

• STATE CHARGE VAT ON BASIC FOOD (Prakas 361 MEF dated 3 April
2018)
• IMPLEMENTATION OF TAX OBLIGATION OF ASSOCIATION AND NON-
GOVERNMENTAL ORGANIZATION (Prakas 464 MEF dated 12 April
2018)
• GUIDELINE ON TAX ON INCOME PAYMENT FOR INSURANCE INDUSTRY
(Prakas 490 MEF dated 30 April 2018)
• DOUBLE TAX AGREEMENT
CONTENTS (CON’T)

2 years exemption from
✓ Tax on Profit (TOP)
✓ Prepayment of TOP
✓ Minimum tax
***Note: SMEs that do
not voluntarily register
are not qualified to
receive such tax
incentives.
The SMEs which
voluntarily
register for tax
during the years
2017 and 2018
are subject to
tax incentives as
follows:
Sub-decree No. 17 dated 7 Feb 2017
TAX INCENTIVES FOR SMALL AND MEDIUM
ENTERPRISES (SME)

WITHHOLDING TAX ON DIVIDEND
DISTRIBUTIONS
Conversion of retained earnings into capital (partially/fully)
• Not considered as dividend distribution
• Not subject to WHT on dividend distribution
• Must have a Board Resolution and the amended capital must be
recognized by the competent authorities
Prakas 518 MEF dated 05 May 2017

Sale of shares or distribution of
capital from conversion of retained
earnings
• During the on-going operation
• During liquidation or dissolution
of the enterprise
Subject to WHT on the
portion that is
converted from the
retained earning and
not yet subject to WHT
WITHHOLDING TAX ON DIVIDEND
DISTRIBUTIONS

NON-TAXABLE SUPPLY UPDATE
Newly defined non-taxable supplies includes:
Educational service
Electricity and clean water supply
• For household and business consumptions
• Excludes cable installation, pipelines
installation, other related measurement
electricity tools and production of pure
drinking water

NON-TAXABLE SUPPLY UPDATE (CON’T)
Unprocessed agricultural product
• Obtained from domestic agriculture
• Not yet processed into final
production
Solid and liquid waste removal or
collection services

Notification GDT 11278 dated 06 July 2017
VALUE ADDED TAX (VAT) ON PRIMARY
FINANCIAL SERVICES
Definition of primary financial service
• Receiving deposits and providing
loans or credit, excluding service fees
related to the provision of credit or
loan
• Money exchange services
• Financial security service
• Trade of gold which has not been
processed to jewelry
• Issuance of initial public
offering (IPO), securities or
other financial instruments
trading, and securities
clearance and settlement
services in Cambodian
Securities Exchange

Notification GDT 11278 dated 06 July 2017
VALUE ADDED TAX (VAT) ON PRIMARY
FINANCIAL SERVICES (CON’T)
Postponement of implementation of VAT
on the newly defined primary financial
services (above mention) by notification No.
11278 dated 6 July 2017 issued by GDT

Prakas 577 MEF dated 07 June 2017
Taxable profit and Tax on Profit (TOP)
Incomes derived from Cambodian sources are taxable profit and
subject to TOP (para. 4, article 3 new, LOT)
TOP = Taxable profit within the year X Tax rate in article 20 new (1)
Additional Tax on Profit of Dividend Distribution (ATDD)
If a foreign branch distributes its profit to its head office, the distributed
profit is
• Subject to ATDD on the amount extracted from the taxable profit that
has not yet paid TOP in Cambodia
• No ATDD is imposed on the remittance of profit after tax
BRANCH TAX on PROFIT (PT) AND WHT

Prakas 577 MEF dated 07 June 2017
WHT on Cambodian source incomes
If a foreign branch transfers Cambodian source incomes to its head
office, the branch is obligated to withhold 14% WHT of the total
transferred amount.
BRANCH PROFIT TAX (PT) AND WHT TAX
(CON’T)

Prakas 638 MEF dated 04 July 2017
The exemption will be available only to taxpayers
that comply with stringent rules governing the
maintenance of proper accounting records.
Accounting records will be reviewed every 2 years
by a committee established by the GDT
MINISTRY’S CLARIFICATION OF CONDITIONS
FOR MINIMUM TAX EXEMPTION

Prakas 638 MEF dated 04 July 2017
The accounting records of an enterprise will be
deemed to be improper maintained in the
following cases:
• The records are not kept in accordance with the
requirements of the General Department of
Taxation (GDT) and the accounting standards
set by the MEF
• The enterprise fails to issue sales invoices
• The enterprise’s actions are seriously negligent
• The enterprise engages in tax evasion activities
• Must have their financial statements audited by
independent auditors for enterprises with annual
turnover exceeding KHR 2 billions (~USD500,000)
MINISTRY’S CLARIFICATION OF CONDITIONS
FOR MINIMUM TAX EXEMPTION (CON’T)

Prakas No. 986 MEF dated 10 October 2017
Transfer pricing overview
TRANSFER PRICING GUIDELINES
The price by which goods, services, and property are
transferred between related parties.
Pricing of related party transactions can shift benefits from
one related party to another through an increase or decrease
of the price of goods, services, and property.
Are not at market value or at the arm’s length price of an
uncontrolled transaction.

Prakas No. 986 MEFdated 10 October 2017
Application of the arm’s length principle
the comparability analysis conducted to assess the arm’s length
nature of the controlled price must meet one of the two
conditions below
TRANSFER PRICING GUIDELINES (CON’T)
The arm’s length range is a set of finance-related indicators (i.e., price
or profit margin) determined from comparable uncontrolled
transactions upon applying the appropriate transfer pricing method.
The comparable transaction has no significant difference that can
affect the market price.
Reasonably accurate adjustments can be made to eliminate effects
of the significant difference.

Transfer pricing methods
the comparability analysis conducted to assess the arm’s length
nature of the controlled price must meet one of the two
conditions below

Ownership of the intangible property
determination of ownership must follow the steps below:
❖ Determine economically significant risks such as development,
enhancement, maintenance, protection, and exploitation of the
intangible property that is managed or used in operation.
❖ Inspect the agreement to determine legal ownership by examining
registration conditions, licensing terms, and other legal documents
that prove the legal ownership as well as other rights and obligations
including significant risk plan within related parties.

Ownership of the intangible property (Con’t)
❖ Analyze functional practices, property usage, and risk management
of each party associated with the development, enhancement,
maintenance, protection, and exploitation of intangible property to
identify the party that is responsible for managing external functions
and significant economic risks.
❖ Examine consistencies between agreement conditions and actual
practices of each party.

Ownership of the intangible property (Con’t)
❖ Prove that actual controlled transaction is involved with the
development, enhancement, maintenance, protection, and
exploitation of the intangible property.
❖ Determine arm’s length price for those transactions in order to be
consistent with function, asset, and risk profile of the parties involved.

Intra-group services
In analyzing the services provided to a
related party, the following must be
examined:
❖ Determine if actual services are performed
❖ Determine if the service fee is conducted
at arm’s length

Documentation
taxpayers with related party transactions are required to prepare,
but is not limited to, the following documents:
❖ General information of enterprise and related parties (related
parties’ structure, business strategies, etc.)
❖ Information about the related party transaction/s (transaction
documents including supply, transport and payment, product,
agreement, etc.)
❖ Transfer pricing method information (pricing policy, market
information, documents supporting the selected transfer pricing
method, and other related documents, etc.)

Penalty can
be either:
Revoke the certificate of
tax compliance of the
entity
Re-evaluate the
certificate of tax
compliance and
penalise the entity in
accordance with
Article 133 of the Law
on Taxation of
Cambodia
Sue the entity for
criminal tax offenses
and penalise them as
provided in Article 134
to 138 of the Law on
Taxation

IMPLEMENTATION OF WHT ON INTEREST OF
MFI’S OVERSEAS LOAN
MFI needs to
withhold WHT at
10% from payment
made to non-
resident taxpayers
4% of WHT is
considered as
owned state
charge
WHT rate on
interest of
overseas loan is
14%
(Article 26 of Law
on Taxation)

IMPLEMENTATION OF WHT ON INTEREST OF
MFI’S OVERSEAS LOAN (CON’T)
MFI needs to keep supporting documents as follows:
Proper and
accurate record
in accounting
records
Fund transfer
document
related to loan
agreement
Loan agreement
which has been
certified by
attorney of both
parties

Instruction 002 MEF dated 15 Jan 2018
• New threshold and accumulated deduction are shown below:
*Assumption: USD 1 = KHR4,000
NEW TAX ON SALARY THRESHOLD
EFFECTIVELY FROM 1 JANUARY 2018 ONWARD
Monthly salary
Tax Rate
Accumulative
deducted threshold
KHR USD* KHR USD*
below 1,200,000 0 – 300 0% 0 0
1,200,001 to 2,000,000 301 – 500 5% 60,000 15
2,000,001 to 8,500,000 500 – 2,125 10% 160,000 40
8,500,001 to 12,500,000 2,126 – 3,125 15% 585,000 146.25
More than 12,500,000 Over 3,125 20% 1,210,000 302.50

Prakas 361 MEF dated 3 April 2018 on the state charge VAT for the
basic food such as
• Meat e.g beef, buffalo meat, goat meat, lamb, pork, chicken
meat and duck meat in any forms in raw or fermentation
• Poultry eggs in fresh or fermentation
• Fresh water fish and salt water fish included lobster, shrimp, prawn
and crab in any forms in raw or fermentation
• All kind of sugar but not candy
• All kind of salt
• All kind of soy and fish source
This state charge VAT on above items are valid for 2 years only, 2018
and 2019. It doesn’t apply on the supply of food in the restaurant
STATE CHARGE VAT ON BASIC FOOD

Prakas No. 464 MEF dated 12 April 2018
IMPLEMENTATION OF TAX OBLIGATION OF
ASSOCIATIONS AND NON-GOVERNMENTAL
ORGANIZATION
Tax registration
•Associations and NGOs are required to register with the tax
authorities in accordance with the tax law and regulations.
Tax on income (TOI)
exemption
•Income purely for religious, charity, scientific, or education purpose,
and no part of which serves private interest of shareholder or physical
person.
Eligibility of TOI
exemption
•Submit an application to GDT
•Notify the GDT of any changes within 15 Days
•Any activities which are not the principle activities will be deemed as
business activities and subject to a normal TOI rate (i.e 20%)
Other tax obligations
•Obligations for WHT under new Articles 25, 26 (one), and 31 of the LOT
•Obligation for TOS, TOFB, and other taxes in accordance with current
tax law and provisions.
Tax returns lodgment
•Must separately submit monthly tax returns and annual tax returns for
principle activity and business activity as stated in the LOT.

Tax on Income for non-life insurance
GUIDELINE ON TAX ON INCOME PAYMENT
FOR INSURANCE INDUSTRY
Customer
General
insurance/ Small
insurance
General re-
insurance
GDT/Tax branches
Gross premium ($A)
Taxable income for the Insurer
Re-insurance at the
Gross premium ($A) and deem as
non taxable income for the Re-
insurer
Pay Income
tax = %5 x $A
on behalf of
Re-insurance
company
Shall pay the income
tax back to the
Principle

Tax on Income for non-life insurance
FOR INSURANCE INDUSTRY (CON’T)
• Non taxable incomeInterest income from Bank
• Non taxable income and not subject to WHT
Commission and monetary
compensation from Re-
insurance
• Taxable income as stated in article 20 new (1)
and article 28 new of LOT
• Only expenses directly related to the activities
will allow to be deductible expense.
Other income from non-
insurance activities

Tax on Income for life insurance and re-insurance
1. Income from life
insurance and re-
insurance activities
2. Interest Income
from bank
3. Investment returns,
rental & loyalty fee,
realized capital gain,
and other
compensations
Taxable income
All kinds of income,
expect income from
general insurance
and re-insurance
activities shall be
subject to 1% PTOI on
the monthly returns
1% PTOI
Settlement for life re-
insurance to non-
resident shall be
subject to WHT
WHT exposure
FOR INSURANCE INDUSTRY (CON’T)

DOUBLE TAX AGREEMENT
DTAs Signed date In force
Cambodia-Singapore 20 May 2016 Yes
Cambodia-Thailand 7 September 2017 Yes
Cambodia-China 13 October 2016 1 January 2019
Cambodia-Brunei 27 July 2017 Not yet, 1 January of the
following year after ratification
Cambodia-Vietnam 4 April 2018 Not yet

SIMPLIFIED ACCOUNTING
FOR SMALL TAXPAYERS
AND ISSUES FOR SMALL
TAXPAYERS
MR. ANTHONY GALLIANO
Group CEO of Cambodian Investment
Management

Anthony is the CEO of Cambodian Investment
Management, Chairman of
Premium Human Resources, Cambodian
Investment Management Insurance
Agent, Dynamo Digital, Jump Digital
(Cambodia) and Phnom Penh BG Serviced
Offices. A career corporate banker with 27
years international experience, he
began his career in the US, has been stationed
in London, Brussels, Hong Kong
and Bangkok with Citibank and Indonesia and
Cambodia with ANZ. Anthony
holds a degree in Accounting, Diploma in
Cambodian Tax.
MR. ANTHONY GALLIANOGroup CEO of Cambodian Investment Management

SIMPLIFIED ACCOUNTING FOR SMALL TAXPAYERS
AND ISSUES FOR SMALL TAXPAYERS
ANNOUNCEMENT
Cambodian Investment Tax Services
opens in June, 2018 in Siem Reap
#627(E0, E1, E2), Street 06, Mondol Muoy
Svay Dankum, Siem Reab, Siem Reap

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

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.

- Introduces Small Taxpayers under self declaration system
- Encourages Small Taxpayers to comply with the tax regulations
- Encourages fair competition
- Increase the state revenue
- Introduces the guidelines of SAF for Small Taxpayers

Simplified Accounting Format:
SAF is a single entry accounting format that contains
accounts to record daily business transactions and
attached with invoices or documents clearly specifying
income and expenses.

The general rules for SAF include the use of:
- Single entry system rather than double entry
- Cash basis record rather than accrual basis
- Invoices upon supply or purchases as basis for
recording, including invoices for returned goods and
services

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

Small Taxpayer 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

FORMING A SOLE PROPREITORSHIP/SMALL TAXPAYER
- Department of Commerce
- Sangkat (not all tax branches)
- Tax Branch

FOREIGNERS MAY NO LONGER REGISTER AS SMALL TAXPAYERS
Department of Commerce
- Passport/ID with fingerprint in blue ink (preferred)
- Lease (registered business address)
- Photo of building 10 cm by 15 cm
- Map locating the building
- Photo of Owner 4 by 6 cm
- Company Name and Activity, no name check
RECEIVE CERTIFICATE OF INCORPORATION

SANGKAT
- Lease has to be in Khmer
- Signed or Fingerprinted
- Complete Application or Form (some Sangkats)
- Obtain Stamp
- Pay Fee (very variable by Sangkat)

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

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

Issues with Small Taxpayers
- Foreigners are no longer accepted by the Department of Commerce
as Sole Proprietorships, therefore, can no longer be 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
- Issuance of invoices should be Commercial Invoices. Small
Taxpayers can not claim a VAT credit on purchases and Medium and
Large Taxpayers can not claim a VAT credit on purchases from 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.

- 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 registering taxpayer may face resistance or additional
paperwork. For instance a “consulting” activity must now
show qualifications
- The loss incurred in any tax year cannot be carried forward
to the next tax year

- In audits, some auditors are requesting prior period filings,
prior to registration (i.e. restaurants)
- Some branches require Small Taxpayers to file tax
immediately for withhold on rent from lease
commencement to point of issuing tax id number (i.e.
payment of patent), some do not
- It appears being a Small Taxpayer is main advantage if
dealing with Consumers as Customers.

PANEL DISCUSSION ON
TAX RECENT
DEVELOPMENT, SIMPLIFIED
ACCOUNTING AND
ISSUES FOR SMALL
TAXPAYERS
MR. ANTHONY GALLIANO
Group CEO of Cambodian Investment Management
H.E MR. VANN PUTHIPOL
Deputy Director-General, General Department of Taxation
MR. SENH SENGHOR
Deputy Director of Small and Medium Taxpayers
MR. KRAUTCH SOCHARA
Legal Advisor, Bun & Associates
MR. CHUM SOCHEAT
Tax Manager, R&T SOK & HENG

Group CEO of Cambodian
Investment Management
Mr. Anthony Galliano
MODERATOR
H.E. MR.
VANN PUTHIPOL
Deputy Director
General of Taxation
Panel Discussion on Tax Recent Development,
Simplified Accounting and Issues for Small
Taxpayers
MR. SENH SENGHOR
Deputy Director of Small and
Medium Taxpayers
MR. KRAUTCH SOCHARA
Legal Advisor, Bun & Associates
MR. CHUM SOCHEAT
Tax Manager, R&T SOK & HENG

LUNCH
MEDIA SPONSOR DIGITAL MEDIA SPONSORS

INDUSTRY SPECIFIC TAX
REGIME: TOURISM &
HOSPITALITY
MS. REANGSEY DARITH TOUCH
Senior Tax Manager, Ernst & Young

Ms. Reangsey Darith Touch is a Senior Manager
in the Tax and Advisory Services
Division of Ernst & Young (Cambodia) Ltd. With
more than 7 years of professional
working experience, Reangsey has advised a
wide range of both local and
international clients on tax structures, planning,
due diligence, compliance,
licensing, and taxation aspects in different
industries. Reangsey holds a Master’s
Degree of Professional Accounting from the
University of Auckland.

• Tax regime for Tourism & Hospitality
(T&H) sector
• Taxpayers’ obligations under T&H
sector
• Common issues under T&H sector
CONTENTS

TOURISM AND HOSPITALITY
Overview:
• Similar to other industries, T&H follows general laws on
taxation of Cambodia
• Only a few regulations that are particular for T&H

T&H SECTOR – TAX REGIMES
Tax regimes applicable for T&H sector
Medium taxpayersSmall taxpayers Large taxpayers
▪Sole proprietors, joint
ventures or partnerships
with turnover from
KHR250m (US$62,500) to
KHR700m (US$175,000)
▪Enterprises with turnover
from KHR700m
(US$175,000) to KHR4b
(US$1m)
▪Representative office of
foreign company
▪Registered company
▪Enterprises with turnover of
more than KHR4b (US$1m),
subsidiaries of foreign
companies, branch of foreign
company or qualified
investment project (QIP)
enterprises

T&H SECTOR – TAXPAYERS’ OBLIGATIONS
Monthly tax obligations:
Taxpayers under T&H sector are obliged to file monthly taxes
which is due on the 20th of the following month and the monthly
taxes include:
▪ Prepayment of Tax on Income (PTOI)
▪ Withholding Tax (WHT)
▪ Tax on Salary (TOS)
▪ Tax on Fringe Benefits (TOFB)
▪ Value Added Tax (VAT)
▪ Specific Tax on Certain Merchandises and Services (ST)
▪ Accommodation Tax (AT)
▪ Public Lighting Tax (PLT)

Monthly tax obligations (Cont.):
▪ ST is imposed on certain goods and services that are imported
or produced and supplied in Cambodia.
▪ ST is calculated as follows:
▪ Local services: tax base is the price services on the invoice
▪ Imported goods: ST is calculated inclusive of customs duty and
the CIF value excluding VAT
▪ ST rate: 10% (entertainment services), 10% (local and
international air tickets sold in Cambodia) …

▪ PLT is an indirect tax imposed on sales of alcohol and
cigarettes at all stages of supply.
▪ It is taxed at rate of 3% for both import and domestically
produced goods.
▪ All types of cigarettes and alcohol (including beer, grape
wine, spirit, except palm wine and white wine which is family
business production), are subject to PLT.
▪ PLT is calculated on the selling price exposed on invoice
excluding VAT and PLT itself. The basis for calculating PLT is
100% for importer and 20% for reseller (Prakas No.
976.MEF.PK.GDT released on 9 October 2017)

▪ AT is collected from customers for use accommodation
services provided by accommodation service provider in
Cambodia.
▪ Accommodation service includes hotel, hotel apartment, suite
hotel, resort hotel, motel, lodge, bungalow, guest house, tourist
camping, and other similar accommodation places excluding
house rental whether it is short or long term.
▪ It is taxed at rate of 2% of accommodation fee inclusive of all
taxes and other service charges except VAT and AT itself.

Annual patent tax certificate:
▪ Due date: by 31 March
▪ Apply to: All taxpayers having business operation in Cambodia
Taxpayers operating multiple business activities → Patent tax separately
(except secondary activity to support the main business activity)
Branch, warehouse, factory, or workshop for a particular business activity in
the same capital or province → One patent tax certificate (except those
who are located in different capital or province)
▪ Tax amount:
▪ Small taxpayers: KHR400,000
▪ Medium taxpayers: KHR1.2m
▪ Large taxpayers: KHR3m if annual turnover <= KHR10,000m or KHR5m if
annual turnover > KHR10,000m (Branch, warehouse, factory, or workshop
located in different capital/provinces: KHR3m)

Annual Tax on Income (TOI):
▪ Due date: within 3 months after financial year end
▪ Important notices:
▪ Use audited financial statements for TOI preparation
▪ Prepare TOI return based on consolidated financial statements if having
branches
▪ Attached branch’s income statements to TOI return
▪ Submit branch’s income statements based on the GDT templates to
each branch
▪ Submit separate TOI return for taxpayers operating multiple projects with
different tax rates
▪ Attach balance sheet, income statement, related parties table with the
TOI return
▪ Attach authorized letter if it is prepared by a tax agent
▪ Annual market interest rate → It will be provided by the GDT

Annual Tax on Transportation (TOT)
▪ What – 2018 TOT
▪ How – Bank transfer payments
▪ When – 15 June to 30 November 2018 (For 2018)
▪ Required documents:
Existing vehicles:
▪ TOT ID or
▪ 2 copies of TOT form attached with 2016 TOT
New vehicles:
▪ 2 copies of TOT form attached with vehicle ownership ID/inspection
certificate/import tax receipt/letter certified by commune & ID card
▪ Penalty – 100% of the tax that must be paid

Annual Property Tax (PT)
▪ What – Tax on immovable property
▪ How – Collected annually at a rate of 0.1% on the immovable
property exceeding the value of KHR 100,000,000 (approximately
USD 25,000)
▪ When – by 30 September of each year
▪ Who is liable – Owners, possessors or “final beneficiaries” of
immovable property

Small Medium Large
Monthly tax obligation - File 1 return
including all taxes
- Charge VAT at 10%
of sale and pay 2%
- WHT only on rent
- File 4 returns
- Pay 10% VAT
- WHT based on the
LOT
- File 4 returns
- Pay 10% VAT
- WHT based on the
LOT
Tax on income obligation 0%-20% on taxable
income
20% on taxable
income
20% on taxable
income
Tax audits (desk, limited
& comprehensive audit)
Yes (but not yet
inforce in practice)
Yes Yes
Accounting records - Simplified
accounting
- 3 years documents
retention
- CAS
- 10 years documents
retention
- CAS
- 10 years documents
retention
Patent tax KHR40,000 KHR1.2m KHR3m or KHR5m

Conditions for Maintaining Proper Accounting Records (MT
Exemption):
▪ MT exemption → maintain proper accounting records
▪ Conditions for maintain proper accounting records:
▪ Keep records in accordance with the GDT requirements and the MEF
accounting standards
▪ Properly issue sales invoices
▪ Does not make any seriously negligent
▪ Does not engage in tax evasion activities
▪ Must have financial statements audited by independent auditors for
enterprises with annual turnover exceeding KHR 2 billions
▪ Accounting records will be reviewed every 2 years by a GDT
committee and notified in advance to taxpayers

T&H SECTOR – COMMON ISSUES
Valid tax invoice:
 Name, address, and VAT TIN of seller or
supplier
 Clear invoice number in a chronological
order and invoice date
 Name, address, and VAT TIN of purchaser
 Description, quantity, and selling price of
the goods or services
 Total prices excluding tax and separate
tax amount

Valid commercial invoice:
→ Same requirements as tax invoice
 Total prices including tax and no
separate tax amount
*** All invoices have to be in Khmer, or adding
English is possible but Khmer is the priority and must
be placed on top.
The real Qs???
▪ Can taxpayers issue invoice-serial number with
text and numbers?
▪ Can taxpayer use more than one invoice-serial
number?
▪ Whose signature is required?
▪ Is stamp required?

WHT implication on rental:
▪ WHT on rental payment shall be imposed on the following:
▪ Payment to registered taxpayers – 10% WHT
▪ Payment to non-registered taxpayers – 10% WHT
▪ Payment (Sub-lease) to real estate companies in Cambodia –
Exempt from 10% WHT
▪ 10% WHT burden – on recipients of rental income
▪ If borne by payer, non-deductible for payer’s TOI purpose
▪ Payment arrangement must be consistent with conditions under
lease agreement and invoice
▪ 10% WHT exemption qualifications
▪ Lessee must be a registered entity and holds patent certificate of
doing sublease/real estate activity

Tax on Fringe Benefit (TOFB) implications:
▪ Circular MEF 011 dated 06 October 2016 – Exempt from TOFB:
▪ Commuting allowance and accommodation allowance/provided
accommodation within the work premise in accordance with Labor Law
▪ Meal allowance to all workers/employees equally regardless of position or
job classification
▪ National Social Security Fund or social welfare fund stipulated in the law
▪ Health or life insurance premium/compensation provided to all
workers/employees equally regardless of position or job classification
▪ Child allowance or nursery expense provided in the Labor Law
▪ Severance pay for termination or indemnity for layoff provided in the
Labor Law
▪ Employees’ allowance / benefit policy → Submit to the GDT

T&H SECTOR – TRAVEL AGENT
Issues with travel agent:
▪ Service of selling bus ticket and air ticket for domestic and oversea
travelling - Whether 10% VAT and 1% PTOP are imposed on the gross
amount received from the customers or only on the commission
income only?
▪ Outbound tour guide services – Whether or not10% VAT is imposed on
outbound tour guide income?

TAX FOR NON-PROFIT
MR. PY BORAPYN
Tax Country Associate Director, DFDL

Py is Tax Country Associate Director for the
Cambodian Tax Practice Group. He has nine
years’ experience as a tax adviser in Cambodia
and Thailand, including work in tax advisory, tax
compliance and transfer pricing at “Big Four”
accounting firms. Py specializes in corporate
taxes, expatriate taxes, tax audits and disputes.
He speaks Khmer and English.
MR. PY BORAPYN

88
COMMON COMPLIANCE TAX ISSUES
FOR LNGO & FNGO
Tax Registration
Recent Development (Prakas no. 464 MEF.PrK)
Detailed Analysis of Applicable Tax Exemption

89
TAX REGISTRATION
Self-assessment regime of taxation is divided as follows:
▪ Enterprises that have annual turnover from KHR250 million
(USD62,500) to KHR700 million (USD175,000);
▪ Participate in any bidding, quotation or survey for the supply of
goods and services including duties.
▪ Enterprises that have annual turnover from KHR700 million
(USD175,000) to KHR4 billion (USD1 million) or that have been
registered as a legal person;
▪ Sub-national government bodies, associations, LNGOs and
FNGOs; and
▪ Government Bodies, Foreign Diplomatic, and Consular
missions, International Organization and Agencies.
Medium taxpayers
▪ Enterprises that have annual turnover over KHR4 billion (USD1
million) or that have registered as a Qualified Investment
Project (QIP);
▪ Government Bodies, Foreign Diplomatic and Consular missions,
International Organization and Agencies.
Small taxpayers
Large taxpayers

Organization
IO
LNGO
FNGO
TAX REGISTRATION (CONT.)

▪ Local Non-Governmental Organization (“LNGO”)
➢ Established under the laws of Cambodia by natural persons and/or legal entities aiming
at providing funds and services in one or several sectors for the public interest without
generating or sharing profits
➢ Register with the Ministry of interior.
➢ Register with the GDT
▪ Foreign Non-Governmental Organization (“FNGO”)
➢ legal organization established outside the country aiming at conducting activities to
serve the public interest without generating profits.
➢ register with the Ministry of Foreign Affairs and International Cooperation by signing a
MOU.
▪ International Organization (“IO”)
➢ the inter- Governmental Organization (at least two governments) such as World Bank,
JICA
➢ Aiming at conducting activities to serve the public interest without generating profits.

▪ Compliance with the tax regulations.
➢ Article 20 of the Law on Association and Non-Governmental
Organizations:
An association or non-governmental organization, which has registered or
signed a Memorandum of Understanding, shall be subjected to the existing
taxation regime law, and receive incentives and enjoy exemptions in accordance
with the existing laws and provisions.
➢ Article 3 of the LOT:
Legal Person refers to any enterprise or organization carrying on a business
whether or not officially recognized by the competent institutions of the Royal
Government. The term “Legal Person” includes any government institution,
religious organization, charitable organization, non-profit organization. For
non-resident person, the term “Legal Person” means any permanent
establishment in the Kingdom of Cambodia. The term “Legal Person” does not
include a pass-through or sole-proprietorship.

Compliance with the requirement of submission Financial Report (Article 25):
▪ LNGO shall submit
➢ A copy of its activity report and of its annual financial report to the MEF by not later than the end of
February of the following year.
➢ A copy of the original documents sent to the donors within 30 days from the date on which they are sent
to the donors.
➢ 1 (one) copy of project documents and financial agreement with donors by copying from the original
documents within 30 days from the date of the agreement.
➢ This report shall be kept at its office for at least 5 (five) years.
➢ The Ministry of interior may request these documents for review, if necessary.
▪ FNGO shall submit
➢ a copy of its annual activity reports and financial status of the original documents sent to the donors to
the MOFA & MEF within 30 days from the date on which they were sent to the donors.
➢ 1 (one) copy of the project documents and financial agreement with donors by copying from original
documents within 30 (thirty) days from the date of the agreement.
➢ The Ministry of Economy and Finance or the National Audit Authority

94
COMMON COMPLIANCE TAX ISSUES FOR
LNGO & FNGO
Tax Registration

Instruction on Tax Compliance of Associations and Non-Governmental Organizations
▪ Article 4: Definition
1. “Association refers to membership organization or similar organization
created by individuals or/and entities with the aims of representing and
protecting the interest of its members without seeking any profit or sharing
proceeds. Association also includes commercial, industrial or agricultural
chamber. For the purpose of this Prakas, an association created in Cambodia
is referred to as “Local Association”, while an association created outside
Cambodia is referred to as “Foreign Association”.
2. “NGO refers to non-membership organization or similar organization,
including foundation, created by individuals or/and entities other than
government institutions with the aim of providing funds or services in one or
more sectors to serve the public interest without seeking any profit or sharing
proceeds. For the purpose of this Prakas, an NGO created in Cambodia is
referred to as “Local NGO”, while an NGO created outside Cambodia is
referred to as “Foreign NGO”.
PRAKAS NO. 464 MEF.PRK DATED 12
APRIL 2018

Instruction on Tax Compliance of Associations and Non-
Governmental Organizations
▪ Article 5: Tax registration
“… All associations and NGOs are required to register with tax
administration in accordance with the applicable tax laws and
regulations.”
▪ Article 6: Exemption from income tax
“… Income subject to tax exemption under this Prakas includes
legal funds or donation from individuals or entities, resources or
assets of the association or NGO, contribution of its members, and
other sources of income, except the income from business activities
as stated in article 8 of this Prakas.”
APRIL 2018 (CON’T)

Instruction on Tax Compliance of Associations and Non-Governmental
Organizations
▪ Article 8: Activities not related to its objectives
1. “All activities of associations or NGOs, which are not related to their
objectives as stated in paragraph a, article 6 of this Prakas, for the purpose
of seeking profit or funds are deemed as separate business activities and
shall be subject to tax in accordance with applicable tax laws and
regulations.”
2. “The associations and NGO shall be obliged to register with tax
administration and record a separate account book for their business
activities which are outside their principal objectives.”
3. “Separate business activities of the association and NGO in this article shall
be categorized into any type of taxpayer based on their annual turnover as
stated in Prakas no. 025 MEF.PrK.GDT dated 24 January 2018.”

▪ Business activities provided as examples under Prakas 464
➢ Restaurant;
➢ Motor vehicle repair house; and
➢ Training school.
Income generated by these business activities are subject to TOI even if it
is used to support the organization’s activities.

99
COMMON COMPLIANCE TAX
ISSUES FOR LNGO & FNGO
Tax Registration

APPLICABLE TAX EXEMPTION FOR
LNGO/FNGO
TOI Exemption
VAT Exemption
TOS Exemption
Custom Duty Exemption
Tax on Immovable Property
Tax on Transportation Mean

WHO IS ELIGIBLE FOR TOI AND VAT
EXEMPTION?
▪ An organization operated exclusively for religious, charitable,
scientific, literary, or educational purposes can be exempt from Tax
on Income/ Minimum Tax and VAT if:
➢ no part of the income or property is used for private interest;
and
➢ it receives recognition of tax-exempt status from the Ministry
of Economy and Finance
▪ The exemption only applies to income or the provision of services
which are substantially related to the purpose or function which
was declared to MEF in order to obtain the exemption.

PROCEDURES TO REQUEST FOR TOI
AND VAT EXEMPTION
▪ Prepare application letter to the MEF
➢ The application letter must be prepared in Khmer and print it
with the letter head of the applicant.
➢ Clearly define the goal and objective of the Organization
➢ Clearly address the achievable tasks/project and on-going
project of the Organization;
➢ Clearly address the source of fund (donor…)
➢ misc.
▪ Application letter must be submit to the MEF with the
requirement supporting documents as per Prakas TOP.
▪ To obtain approval, it might take at least 2-3 months.

REQUIRED DOCUMENTS FOR TOI AND
VAT EXEMPTION
Based on the Prakas TOP, the application letter for tax exemption must be
accompanied by the following documents:
▪ Goals and objectives of the organization;
▪ Names and addresses of resident persons, if any, who are the members
of the board of directors of the organization;
▪ Names and addresses of director or directors responsible for the
operation of the organization in the Kingdom of Cambodia;
▪ Source and use of all funds granted for the operation of the organization
inside the Kingdom of Cambodia;
▪ List of assets held in the Kingdom of Cambodia
▪ Chart of accounts of the organization.
▪ Latest MOU with relevant ministries or governments, if any.
▪ Latest registration with relevant ministries or governments, if any.

WHO IS ELIGIBLE FOR TOS EXEMPTION?
▪ The International Organization will be eligible for TOS exemption.
▪ The term International Organization (“IO”) refers to the inter-
Governmental Organization (at least two governments).
▪ Foreign representatives, officials and employees employed by IOs
may be exempt from Tax on Salary or on Fringe Benefits if such
exemption is in their MOU with the Royal Government and the
MOFA. (Article 43 of the LOT)
▪ The exemption is subject to obtain the approval for the MEF.

WHO IS ELIGIBLE FOR TOS EXEMPTION?
(CONT.)
An individual will also be exempt from TOS if:
▪ He is employed by a foreign entity that has no permanent
establishment in Cambodia;
▪ He is present in Cambodia for no more than 182 days in any period
of 12 months ending in the applicable tax year;
▪ The salaries are not borne by or charged against another entity
that is resident in Cambodia or a permanent establishment in
Cambodia.

WHO IS ELIGIBLE FOR CUSTOM DUTY
EXEMPTION?
Custom duty free from the import of foreign diplomatic and consular
missions and international organizations– Subject to the approval issued
by related ministries that foreign diplomatic and consular missions and
international organization involves with.
In practice the organization may be required to submit a Master List
outlining the equipment and materials that it intends to import into
Cambodia for the calendar year.
Once approval has been obtained from the MEF the Master List can be
provided to the Department of Excise and Customs in Cambodia to apply
the customs duty and VAT exemption if applicable.

WHO IS ELIGIBLE FOR TAX ON
IMMOVABLE PROPERTY EXEMPTION?
Property both owned and used by a non-profit organization.
Note: If a non-profit organization leases a property, or owns property
that is leased to an organization that is no a non-profit lessee, NO
exemption on Tax on Immovable Property.

WHO IS ELIGIBLE FOR TAX ON
TRANSPORTATION MEAN EXEMPTION?
Notification no. 9334 GDT dated 12 June 2017
[…] Exemption on vehicles owns by embassy, personnel of diplomatic
missions, International Organizations, or technical assistance projects of
foreign governments […]
Note: Those entities must request to the GDT in order to receive the
letter confirmation from the MEF.
Practice: other NGOs/FNGOs also can request for tax on transportation
exemption, but the approval depends on case by case.

NEXT STEPS
1. Register for Tax.
2. Evaluate Exposure – especially for WHT, TOS & TOFB for both
locals and expatriates.
3. Obtain Tax Exemption Certificates for TOI , VAT, and TOS (if
applicable).
4. Make sure that all filings are current.

PANEL DISCUSSION ON
INDUSTRY SPECIFIC TAX
REGIME: TOURISM &
HOSPITALITY AND TAX
FOR NON-PROFIT
H.E ENG RATANA
Director of Department of Large Taxpayers
MR. SRUN ANGKAREN
Director of Department of Tax Crime Investigation
MR. PY BORAPYN
MR. SIYONN SOTHEARA
Tax Manager, Deloitte

Senior Tax Manager,
Ernst & Young
Ms. Reangsey
Darith Touch
MODERATOR
H.E ENG RATANA
Director of Department of
Large Taxpayers
Panel Discussion on industry specific tax regime:
tourism & hospitality and Tax for non-profit
MR. SRUN ANGKAREN
Director of Department of
Tax Crime Investigation
MR. PY BORAPYN
Tax Country Associate
Director, DFDL
MR. SIYONN SOTHEARA
Tax Manager, Deloitte

WRAP-UP & CLOSING
REMARKS
Chairwoman, EuroCham Tax Committee
Director of Tax and Advisory Services, Deloitte
MS. KIMSROY CHHIV

EUROCHAM CAMBODIA SIEM REAP TAX
FORUM MADE POSSIBLE THANKS TO
MEDIA PARTNER
SPONSORED BY

COFFEE BREAK &
NETWORKING
EVENT

Siem Reap Tax Forum (Eurocham Cambodia and GDT)

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