Asia Pacific Taxation 2010 Cambodia

Asia Pacific Taxation
Cambodia 2010 Edition
Cambodia Asia Pacific Taxation 2010 Edition
Contents
1 2 General Taxation of Companies 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 3 4 5 6 Introduction Residence Taxable income Capital Gains Tax Dividends Exempt Income Deductions Losses Grouping / Consolidation Tax Depreciation / Capital Allowances Amortization of Expenditure Interest Expenses Tax Rates Tax Administration 2 3 3 3 3 3 3 4 4 5 5 5 5 5 6 6 8 10 11 12 12 12 13 14 14 14 14 15 15
Setting up Business Foreign Exchange Controls Tax Incentives International Tax 6.1 6.2 6.3 Double Tax Relief Withholding Taxes Double Tax Agreements Introduction Transfer Pricing Permanent Establishment Thin Capitalization Controlled Foreign Company (CFC) Provisions
Anti-avoidance Rules 7.1 7.2 7.3 7.4 7.5
2010 KPMG International Cooperative (KPMG International), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
Taxation of Individuals 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 Introduction Residence Employment Income / Employee Benefits Exempt income Deductions Personal Allowances and Rebates of Tax Tax Rates Tax Administration Social Security Tax Value Added Tax Customs Duty Excise Duty Stamp Duty (Registration Tax) Property Transfer Taxes Tax on Unused Land Tax on Immovable Property (TIP) Payroll Tax Inheritance Tax Gift Tax Other Taxes
16 16 16 16 16 17 17 17 17 18 18 18 19 19 19 19 19 20 20 20 20 20 22 23
Indirect and Other Taxes 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9 9.10 9.11 9.12
10 Glossary 11 Useful links
II
Summary Data
Corporate Tax Rates
The profit tax rate is 20 percent with special rates for specific industries. There is a minimum tax of one percent on annual turnover.
Personal Tax Rates Residents

The personal income tax rates are as follows:
Taxable Income for the Month (KHR) Progressive Tax Rate (%)
Up to 500,000 From 500,000 1,250,000 From 1,250,001 8,500,000 From 8,500,001 12,500,000 Over 12,500,000
0 5 10 15 20
Non-residents
Non-residents are taxed on the Cambodian source income at the flat rate of 20 percent.
Currency
1 US Dollar = 4,241 Cambodian Riel (as at July 30, 2010) 1 Cambodian Riel (KHR) = 0.00023 US Dollar (USD)
Source: Notification no. B9.010.417 NT, issued by the National Bank of Cambodia on July 30, 2010.
General
The principal taxation law of Cambodia is the LoT adopted by the National Assembly in January 1997. In 2000, the Ministry of Economy and Finance issued a Prakas (regulation) on Tax on Profit to clarify certain tax provisions stipulated in the 1997 Law. The LALoT was signed into Law in March 2003, and the revised Prakas on Tax on Profit was issued in December 2003. Residents are subject to tax on worldwide income, whereas non-residents are subject to tax only on Cambodian sourced income. Real regime taxpayers without investment incentives are subject to a flat profit tax rate of 20 percent. Minimum tax of one percent on total annual turnover is payable regardless of the level of taxable income. The enterprises established in the Kingdom of Cambodia that have ordinary share capital of more than 51 percent owned by a foreign parent company can submit a request for a change of tax year to apply a date other than 31 December. Business enterprises undertaking investment projects may obtain special tax incentives as approved by the CDC (see 5.0). These incentives were initially provided under the LoI. The LALoI was passed in March 2003. The Sub-decree on the Implementation of the LALoI was issued in September 2005. The LALoI makes sweeping changes to the incentives available to QIPs. VAT is levied on a wide range of taxable goods and services supplied in Cambodia and also on the importation of goods. VAT was introduced in January 1999 at a rate of 10 percent, replacing the previous turnover tax. Tax on salary income is deducted at source from individual persons on a monthly basis. At present, individual persons are not required to file an annual tax return and the tax on salary deducted during the year is a final tax. Other non-salary Cambodian source income such as interest is subject to withholding tax. Resident individuals are subject to progressive rates of tax, with a highest marginal rate of 20 percent. Non-resident individuals are subject to salary tax at a flat rate of 20 percent.
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2.1
Taxation of Companies
Introduction
Corporate taxpayers in Cambodia are classified as either resident taxpayers, or nonresident taxpayers. A resident taxpayer is primarily an enterprise that has a place of management and carries on business in Cambodia, as defined below. A non-resident taxpayer is an enterprise that derives Cambodian source income, but does not have a place of management in Cambodia. A non-resident taxpayer will be deemed to be Cambodian resident for tax purposes if it is found to have a Permanent Establishment (PE) in Cambodia (see 7.3 for PE definition). A resident taxpayer is subject to Tax on Profit (ToP) or Corporate Income Tax (CIT) on income derived from both Cambodian and foreign sources income, whereas, a nonresident taxpayer is subject to ToP/CIT in respect of its Cambodian source income only.
2.2
Residence
A company is resident in Cambodia if: It is organized or managed in Cambodia; or It has its principal place of business in Cambodia.
2.3
Taxable income
Taxable income is the net profit obtained from all types of business operations including capital gains realized during the business operation or at the cessation of the business, interest, rental, and royalty income as well as income and gains from financial or investment assets including immovable assets. Taxable profit shall also include all capital gains realized from operations other than business operations on immovable financial or investment property. The determination of taxable income, and the rules and procedures for the collection of tax due, are determined by Prakas (Regulation).
2.4
Capital Gains Tax

All realized gains (including capital gains) are treated as income. Cambodia does not impose a separate tax on capital gains. Gains arising from the disposal of real property and other assets are treated as ordinary income and are therefore subject to tax at the prevailing profit tax rate.
2.5
Dividends
A dividend is defined as a distribution of property or money, made by a legal person to a shareholder. A distribution arising from a complete liquidation is specifically excluded from the definition of a dividend.
Dividends received from resident companies are not subject to income tax. Dividends received from non-resident companies are subject to income tax in Cambodia. A credit is allowed for tax paid overseas on foreign source income, subject to certain conditions.
2.6 2.7
Exempt Income
Dividends received from resident companies are not subject to income tax (see 2.5).
Deductions
Allowable Deductions
Allowable deductions include most expenses incurred in the course of carrying on a business, with certain limitations. The deductibility of charitable contributions is limited to five percent of taxable profit of the taxpayer. Depreciation is allowed as a deduction in accordance with the rates determined by the tax provisions. There are also certain restrictions on the deductibility of interest.
Non-deductible Expenses
Non-deductible expenses include: Increase in provision Any expense on activities generally considered to be amusement, recreation, entertainment Personal expenses, except for fringe benefits which are subject to fringe benefit tax Any loss on sale or exchange of property, directly or indirectly, between related parties Penalties, additional tax and late payment interest imposed for violation of the LOT Non-deductible tax expenses Donations, grants or subsidies Extravagant and/ or unrelated business expenses.
2.8
Losses
Losses can be carried forward for a maximum of five years. Losses cannot be carried back. Tax losses may be forfeited upon a change in ownership of the business or if there is a change in business activity. Tax losses will also be forfeited in the event a taxpayer is subject to a unilateral tax assessment.
2.9 2.10
Grouping / Consolidation
There are no grouping provisions in Cambodia.
Tax Depreciation / Capital Allowances

Depreciation is deductible in accordance with specified rates if the assets are used in the course of carrying on a business. Land is not a depreciable asset. Depreciable assets are divided into the following classes, and are depreciated at the following rates: Class 1: Buildings and structures five percent straight line Class 2: Computers, electronic information systems, software and data handling equipment 50 percent diminishing value Class 3: Automobiles, trucks, office furniture and equipment 25 percent diminishing value Class 4: All other tangible property 20 percent diminishing value
Assets in classes 2 to 4 are accounted for on a pooled basis, and therefore profits and losses on disposals are not directly recognized for tax purposes. Additions are depreciated for a full year in the year of acquisition.
2.11
Amortization of Expenditure
Intangible assets, including preliminary and formation expenses, R&D, patents, copyrights, trademarks, computer software, and purchased goodwill can be amortized over the useful life of the property. If the life of the intangible assets cannot be determined, a tax depreciation rate of 10 percent based on the straight-line method is used. All exploration and development costs of a natural resource, including interest, shall be capitalized and written-off in accordance with the depletion of the resource recorded as a percentage of the estimated total production from the resource.
2.12
Interest Expenses
Interest expense allowable as a deduction is limited to an amount equal to the total interest income plus 50 percent of net non-interest profit earned for the year. Net noninterest profit is the gross income, other than interest income, less allowable non-interest expenses.
The excess amount can be carried forward to future years.
2.13
Tax Rates
The Cambodian Tax Law provides corporate income tax or annual tax on profit (ToP) rates as follows: 20 percent for the profit realized by a legal person 30 percent for the profit realized under an oil or natural gas production sharing contract and the exploration of natural resources including timber, ore, gold and precious stones 9 percent for profit of Qualified Investment Project (QIP) approved by the Council for Development of Cambodia to be expired by 2010 0 percent for the profit of QIP during the tax exemption period as determined by CDC 5 percent on gross premiums received in Cambodia for Insurance Companies engaged in the insurance or reinsurance of life, property or other risks and 20 percent on non-insurance income.
2.14
Tax Administration
Tax Identification Number
Taxpayers are required to register with the GDT and obtain a Tax Identification Number (TIN) within 15 days after the commencement of business. As a matter of practice, taxpayers are required to register with the GDT within 15 days after obtaining the Ministry of Commerces approval to conduct businesses.
Tax Returns
The annual tax return must be filed within three months following the tax balance date. The tax year is generally a calendar year. The return must be filed irrespective of whether the company is making a profit or loss.
Payment of Tax
A company is subject to a monthly prepayment of profits tax (PTP) during the year, which is self-assessed at one percent on monthly turnover inclusive of all taxes except for VAT. However, insurance companies are required to declare and pay the monthly PTP at the rate of 5 percent on gross premiums from insurance or re-insurance income and at the rate of 1 percent on non-insurance related income. Payments of PTP are due by the 15th day of the following month.
The liquidation of the tax on profit is the balance of tax payable after deduction of all tax credits and PTP and must be paid upon the submission of the annual tax on profit return to the GDT by the 31st March in the year following the tax year. The minimum tax 1 is a separate and distinct tax from the tax on profits, and is payable by companies regardless of whether they are in a profit or loss situation. The minimum tax is calculated at one percent on annual turnover inclusive of all taxes except for VAT. However, if the tax on profit is greater than the minimum tax, the minimum tax is not payable. The minimum tax is calculated at year-end, however it should be totally liquidated by the monthly PTP Late payment penalties apply to all tax not paid by the due date.
Tax Credits
Tax paid overseas on foreign source income is available as a tax credit, subject to the taxpayer providing sufficient evidence to substantiate the foreign tax paid. The tax credit is calculated separately for each foreign country and is the lower of the foreign tax paid or Cambodian tax payable on foreign source income.
Record Keeping
All books of accounts, accounting records and other documents must be maintained in the Khmer language and in KHR, and kept for a period of 10 years.
Penalties Regime
Tax penalties are imposed for violations of the LoT and its regulations. The level of penalty is dependent upon the nature of the violation, and is determined as follows: Where a taxpayer or withholding agent is considered negligent, the amount of penalty will be 10 percent of the unpaid tax Where a taxpayer or withholding agent is considered seriously negligent, the amount of penalty will be 25 percent of the unpaid tax Where the taxpayer or withholding agent receives a unilateral tax assessment, the amount of the penalty will be 40 percent of the unpaid tax.
In addition, there are penalties imposed for late payment of taxes and late lodgment of returns, together with interest that is charged at two percent per month. Finally, certain acts, including tax evasion, can lead to criminal proceedings being instigated against directors, managers or shareholders of an enterprise.
The minimum tax is exempted for Qualified Investment Project.

Setting up Business
The CEL was signed by the King of Cambodia in June 2005. The CEL sets out basic rules and obligations for the establishment and administration of commercial enterprises. Previously, there was no company law in Cambodia, and the establishment of enterprises was made in accordance with the Commercial Rules and Register. The types of business organization available under the CEL include: Public limited company Private limited company Branch office Commercial Representative office Partnership (both general and limited).
The characteristics of each legal entity are as follows:
Public Limited Company

A public limited company is defined as a limited company that is authorized by this Law to issue securities to the public.
Private Limited Company

A private limited company has a minimum of two and a maximum of 30 shareholders. However, one shareholder may form a company called a single member private limited company. It is subject to the same requirements as a private limited company. The minimum issued and paid up capital is 1,000 shares at a par value per share of at least KHR 4,000 (KHR four million (approximately USD 1,000). Issued capital can be either in the form of fully paid in cash or with non-cash items. The capital must be in place before the company can be incorporated. A private limited company cannot carry out finance, banking or insurance activities. There is no restriction on the appointment of directors. A private limited company is considered to have Cambodian nationality if it has a registered office in Cambodia and more than 50 percent of its shares are owned by Cambodian nationals. A private limited company with Cambodian nationality is referred to as a local company. Under the Constitution of the Kingdom of Cambodia, a local company has a right to own land. The Chairman of the Board of Directors and the other directors of a local company can be Cambodian or foreigners. A majority foreign-owned private limited liability company does not have a right to own land.
The name of a private limited liability company must reflect its limited liability status, and such status must be printed on all company documents.
Branch office of a Foreign Company

A branch office is a commercial extension of an offshore Head Office. The branch office can undertake commercial operations in Cambodia, and its management and control shall be under the control of directors appointed by the Head Office.
Commercial Representative Office

A CRO may be established by an eligible foreign investor to facilitate the sourcing of local goods and services and to collect information for its parent company. It is not considered a separate legal entity from its parent company. A CRO is regarded as a cost centre and accordingly should derive no income from its activities. A CRO is not subject to tax on profit in Cambodia, however, salary and fringe benefit tax, withholding tax and patent tax imposts will apply.
Partnership
A partnership can be formed as either a General Partnership or a Limited Partnership. A general partnership is formed between two or more persons (called general partners) who have joint and several liabilities for the obligations of the partnership. A limited partnership is a contract between one or more general partners who are the sole persons authorized to administer and bind the partnership, and one or more limited partners, who are bound to contribute to the capital of the partnership, but whose liability is limited to their capital contribution.
Foreign Exchange Controls

All matters relating to the management of foreign exchange are carried out by the NBC. Although the KHR is the official currency of Cambodia, the USD is in common circulation and the majority of commerce is denominated in USD. There are currently no restrictions on the repatriation of profits or capital from Cambodia, and the LALoI 2003 guarantees the rights of foreign investors to remit foreign currencies abroad for: The payment of imports and repayment of principal and interest on foreign loans The payment of royalties and management fees The remittance of profits The repatriation of invested capital on dissolution of an investment project.
The Foreign Exchange Law of 1997 provides for foreign currencies to be freely purchased via the banking system. In particular, the Law states that there should be no restrictions on foreign exchange operations; however, these operations can only be performed through an authorized financial institution. It should be noted that the Law does provide for the NBC to implement exchange controls in the event of a foreign exchange crisis. There are no restrictions on the establishment of foreign currency bank accounts in Cambodia for residents.
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Tax Incentives
The CDC is the principal government agency responsible for providing incentives to stimulate investment in Cambodia. The LoI was introduced in 1994 and substantially revised in 2003. The 2003 revisions have been implemented following the promulgation of the implementing Sub-Decree in September 2005. Investors are required to submit an Investment Proposal to either the CDC or the PMIS to apply for a Qualified Investment Project (QIP) status depending on capital level and location of the investment project in question. The LALoI 2003 changed the way in which incentives are granted. Instead of a list of eligible sectors being provided in the legislation, a negative list was established. This means investment incentives would be available to all sectors not included in the negative list. The investment incentives (generally) available to QIPs are: 1. Exemption from tax on profit imposed by the LoT The tax on profit exemption consists of a Trigger Period (of up to 3 years), 3 years automatic exemption, plus a Priority Period that will be determined on an annual basis in the Finance Law. In effect, the tax exemption period could be extend for a maximum of 9 years 2. Accelerated deprecation on manufacturing assets (however, this is not available if the QIP elects to take the profit tax exemption in point 1) 3. Exemption from import duty on production equipment, raw materials and inputs to manufacture 4. The right to employ foreign labor. On an annual basis, the CDC requires all QIPs to apply for the Certificate of Compliance (CoC), to enable QIPs to continue to receive the investment incentives granted under the investment license. .
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6.1
International Tax
Double Tax Relief
A foreign tax credit is available to a resident in respect of foreign taxes paid, subject to certain conditions. Foreign tax credits in excess of the Cambodian tax liability are lost, i.e. they cannot be carried forward or back.
6.2
Withholding Taxes
Withholding taxes imposed in Cambodia comprise resident withholding tax and nonresident withholding tax. Payment of withholding tax is due on the 15th day of the following month.
Resident Withholding Tax

A resident taxpayer is required to withhold tax from the following payments of Cambodian source income to a resident entity:
Payment Tax Rate (%)
Payment for services to a physical person, including management, consulting, and other similar services Payment of royalties for intangible assets and interests in minerals, oil or natural gas Interest payments made to a physical person or an enterprise, except for interest paid to a domestic bank or savings institution Income from rental of movable or immovable properties Interest payments on savings account made by a domestic bank or savings institution to a resident taxpayer Interest payments on a fixed deposit made by a domestic bank or savings institution to a resident taxpayer
15 15 15 10 4 6
Additional Profit Tax on Dividend Distribution

Additional profit tax on dividend distribution (APTDD) is applicable on the distribution of retained earnings or annual profit after taxes that were subject to the following rates:
ToP rate APTDD rate
0% 9% 20% or 30%
20% 12% (11/91) 0%
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Dividend distributions to Cambodian resident taxpayers, after payment of the APTDD are exempt income in the hands of the Cambodian resident taxpayer. Payment of APTDD to the GDT is due on the 15th day of the following month in which the distribution is paid.
Non-Resident Withholding Tax

A resident taxpayer carrying on a business who makes any of the following payments to a non-resident is required to withhold the non-resident WHT:
Payment Tax Rate (%)
Interest Royalties, rent and other payments connected with use of property Compensation for management or technical services Dividends
14 14 14 14
The liability for WHT rests with the remitter. The GDT has no recourse to recover withholding tax from the recipient of the payment. The WHT is payable at either the date the payment is made, or the date the expense is recorded in the books, whichever is first. Cambodia currently has no Double Tax Treaties (DTA) in place. Accordingly, no DTA relief from WHT is available.
6.3
Double Tax Agreements

Cambodia has not entered into any Double Tax Agreements (DTA) with other countries. However, Cambodia has made investment and trade agreements with a number of countries such as China, Indonesia, Malaysia, Germany, Switzerland, France, Singapore, Russia, United States of America, Lao, Philippines, Korea, India, Thailand, Bangladesh, Brunei, Uganda, and Vietnam.
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7.1 7.2
Anti-avoidance Rules
Introduction
There is no general anti-avoidance provision in the Cambodian tax law.
Transfer Pricing
There is no specific transfer pricing legislation in Cambodia. However, the related party provision of the 1997 LoT (Article 18) gives wide power to the GDT to re-determine related party transactions. The GDT may re determine related party transactions to impose pricing that the GDT considers arm length parties would have undertaken in the transactions. A related party relationship is one where there is a 20 percent or more group shareholders relationship.
7.3
Permanent Establishment
A PE is defined in Cambodia as having a fixed place of business in the Kingdom of Cambodia, the branch of a foreign company or an agent resident in the Kingdom of Cambodia, through which the non-resident person carries on their business. The term PE also includes any other association or connection through which a non-resident person engages in economic activity in the Kingdom of Cambodia. The term economic activity is explained as the regular, continuous or time to time activity of a person, whether or not for profit, in the supply of, or the intent to supply, of goods and services to other persons for the purpose of obtaining any benefit. The Cambodian tax law further states that a PE includes the following forms of business activity in Cambodia: A place of management A branch of a foreign enterprise An office of a foreign enterprise A warehouse A factory A workshop A mine, or any other place of extraction, of natural resources A building site, a construction project or an assembly project, or supervisory activities connected to such site or project where such site or project or activities continue for a period of more than six months
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The furnishing of services including consultancy services by the employees or other personnel of a foreign enterprise where such activities continue within Cambodia for periods aggregating more than six months in any 12 month period.
Notwithstanding all the aforementioned criteria for establishing a PE, the GDT will ultimately decide on a case-by-case basis whether an enterprises activities constitute a PE. As Cambodia has not entered into any DTAs with other countries, the PE provisions under the DTAs are not subject to interpretation by the GDT.
7.4
Thin Capitalization
There is no specific thin capitalization legislation but there are limitations on the deductibility of interest (see 2.12).
7.5
Controlled Foreign Company (CFC) Provisions

There are no CFC provisions in Cambodia.
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8.1
Taxation of Individuals
Introduction
Individual residents in Cambodia are liable to personal income tax/tax on salary on Cambodian and foreign source income, whereas non-residents are subject to income tax on Cambodian source income only. A credit for foreign income tax paid is allowed against Cambodian income tax. The tax credit is calculated separately for each foreign country and is the lower of the foreign tax paid or Cambodian tax payable on foreign source income. Employers are required to withhold income tax from salaries and other benefits paid to employees.
8.2
Residence
A person is resident in Cambodia if the person is domiciled in or has a principal place of abode in Cambodia, or the person is present in Cambodia for more than 182 days during any 12 month period.
8.3
Employment Income / Employee Benefits

Individuals receiving remuneration in the course of employment are subject to personal income tax known as tax on salary. The remuneration includes salary, wage, bonus, overtime and other compensation. A fringe benefit tax on employer-provided cars, housing, low-interest loans, and free, subsidized or discounted goods and services is levied on employers according to the taxable value of the fringe benefits provided to their employees. The tax rate is currently 20 percent and it is payable monthly. The actual cost of providing the benefit will normally be deductible for the employer except for the fringe benefit tax.
8.4
Exempt income
Employment related payments received by a tax resident that are not subject to income tax include: Reimbursement of business expenses by the employer, provided that the costs are incurred in the course of employment, the amounts are not excessive and they can be substantiated Indemnity for layoff within the limit as stated in the Labor Law Additional remuneration received with social characteristics as provided in the Labor Law Supply of free or subsidized uniforms or special professional equipment used in the course of employment Flat allowances for mission and travel received in the course of employment.
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8.5
Deductions
Employees are not allowed any deductions against their salary income as employees are not required to submit annual tax return.
8.6
Personal Allowances and Rebates of Tax

The following relief is provided to resident individuals:
Relief KHR
Child relief for each child per month (14 years old or 25 years old if still at school ) Dependent spouse (must be housewife)
75,000 75,000
8.7
Tax Rates
Residents
The personal income tax rates are as follows:
Taxable Income for the Month (KHR) Progressive Tax Rate (%)
Up to 500,000 From 500,000 1,250,000
0 5 10 15 20
From 1,250,001 8,500,000 From 8,500,001 12,500,000 Over 12,500,000
Non-residents
Non-residents are taxed on salary from Cambodian sources at the flat rate of 20 percent.
8.8
Tax Administration
Returns and Assessments
The salary and fringe benefit tax return and payment are due to be filed and paid to the GDT by the 15th day of the following month. Currently the Cambodian Tax Law does not require a resident individual to submit an annual personal income tax return to the GDT. Accordingly, the monthly salary tax deduction is considered to be a final tax for individuals.
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9.1 9.2
Indirect and Other Taxes

Social Security Tax
There is no social security tax in Cambodia.
Value Added Tax

VAT is chargeable on a wide range of goods and services supplied in Cambodia and on the importation of goods. The basic principle of VAT is to charge tax at each stage of production, allowing each supplier credit for the tax paid, so that the VAT eventually impacts the final consumer. Taxable supplies attract VAT at either the standard rate of 10 percent or the zero rate. Zero rating applies to export of goods and services, and certain charges in relation to international transport of people and goods. Exempt supplies are not subject to VAT and include: Public postal service Hospital, clinic, medical, and dental services and the sale of medical and dental goods incidental to the performance of such services Passenger transportation services by a wholly state-owned public transportation system Insurance services Primary financial services Importation of articles for personal use that are exempt from customs duties Non-profit activities for public interest that have been recognized by the Ministry of Economy and Finance.
Enterprises providing taxable supplies of goods and services are required to register for VAT if they meet the criteria specified below: Corporations, importers, exporters and investment companies Taxpayers with turnover in respect of goods sold exceeding KHR 125 million for the preceding three consecutive months or in the next three consecutive months Taxpayers with turnover in respect of services provided exceeding KHR 60 million for the preceding three consecutive months or in the next three consecutive months Taxpayers undertaking government contracts with a total taxable turnover exceeding KHR 30 million.
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VAT registration must be made at the commencement of business operations or within 30 days in which the taxpayer becomes a taxable person. VAT returns and payment are due to be filed and paid to the GDT by the 20th day of the following month. VAT is payable at 10 percent on imports by reference to the value of the import, including any customs duty, insurance and freight charges.
9.3
Customs Duty
Customs duty is levied on certain goods entering Cambodia. The rates vary depending on the type of goods entering Cambodia. Currently, the duty rates are 7 percent, 15 percent, 20 percent, and 35 percent. As a member of ASEAN, Cambodia has implemented tax tariff reduction schedule under the Common Effective Preferential Tariff Scheme for the ASEAN Free Trade Area (CEPT for AFTA) since 1 January 2000. Goods exempt from customs duty include school facilities, medicine, sport facilities, fertilizer, rice seeds and agricultural tractors. Exemptions can also be obtained as part of the incentives offered by the CDC for investment project undertaken in Cambodia.
9.4 9.5
Excise Duty
See 9.3.
Stamp Duty (Registration Tax)

The following legal documents are subject to a stamp duty of KHR 100,000: Company formation Company merger Dissolution of a company An agreement to provide goods or services to public organizations.
9.6
Property Transfer Taxes

There is a 4 percent tax on transfer of title in certain assets (such as land, building, vehicles). This 4 percent tax is imposed on the transferred value and payable by the party acquiring the asset, within 3 months from the date of the execution of the agreement to transfer the title.
9.7
Tax on Unused Land

A tax is levied on unused land and the registered owner of the land is responsible for the payment of the tax.
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Tax on unused land is based on two percent of the market price per square meter as determined by the Committee for the Valuation Unused Land and is due to be paid annually by September 30.
9.8
Tax on Immovable Property (TIP)

TIP was recently created in the 2010 Law on Financial Management (LFM) to be imposed on certain immovable. The term immovable property is defined as land, houses, buildings and constructions that are built on the land. The Prakas on the collection of the TIP was subsequently issued on 19 July 2010 for implementation of the TIP. This TIP will be collected every year at the rate of 0.1 percent on the value of the immovable property that is more than the threshold of KHR100,000,000 (approximately USD25,000). The value of the immovable property is assessed by the Assessment Committee, which was set up by the Ministry of Economy and Finance. The deadline for paying the TIP is 30 September each year.
9.9 9.10 9.11 9.12
Payroll Tax
There is no payroll tax in Cambodia.
Inheritance Tax
There is no inheritance tax in Cambodia.
Gift Tax
There is no gift tax in Cambodia.
Other Taxes
Special Tax on Certain Goods and Services (STCMS)
Certain goods and services are subject to STCMS which is a form of excise tax that applies to importation or domestic production and supply of certain goods and services. Examples of the levy of STCMS are:
Item Rate (%)
Domestic and international telephone services Domestic and international air ticket Entertainment services Cigarettes Cigars Beers
3 10 10 10 25 25 2
Prior to 1 February 2010, STCMS rate was temporarily maintained at 20 percent, but with effect from 1 February 2010, it has been increased to 25 percent.
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Patent Tax
Patent tax is a yearly business registration tax in which all enterprises carrying on business activities in Cambodia are required to pay by March 31. A patent tax certificate will be issued by the GDT upon registration. The standard patent tax payment is KHR 1,140,000 (approximately USD 285).
Tax on Public Lighting (TPL)

TPL is a tax levied on the sale of tobacco and cigarette products, both imported and domestically manufactured, at each stage of supply. The tax rate is three percent of the value of the taxable product inclusive of taxes but not the TPL nor VAT. The tax is payable on a monthly basis, by the 15th day of the following month. The revenue from the collection of this tax shall be used to improve public lighting in cities and the provinces.
Accommodation Tax (AT)

AT is a tax on the provision of hotel accommodation services. AT is levied at the rate of two percent on hotel accommodation services, inclusive of other services charges and all kinds of taxes but exclusive of the AT itself and VAT. Payment of AT to the GDT is due on the 15th day of the following month.
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Glossary
APTDD AT CDC CEL CRO DTA GDT LALoI LALoT LoI LoT NBC QIP PE PMIS PSC R&D TIN TIP VAT Additional Profit Tax on Dividend Distributions Accommodation Tax Council for the Development of Cambodia Commercial Enterprise Law Commercial Representative Office Double Taxation Agreement General Department of Taxation Law on Amendment on the Law on Investment Law on Amendment on the Law on Taxation 1994 Law on Investment 1997 Law on Taxation National Bank of Cambodia Qualified Investment Projects Permanent Establishment Provincial/Municipality Investment Sub-Committees Production Sharing Contract Research and Development Tax Identification Number Tax on Immovable Property Value Added Tax
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Useful links
Further to the information contained in the following sections, information and developments regarding tax laws in Cambodia can be obtained from the following websites.
KPMG Global Tax website: www.kpmg.com/tax
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Contact us Michael Gordon Partner Tax & Corporate Services Department KPMG Cambodia Ltd 4th floor, Delano Center No. 144, Street 169 Sangkat Veal Vong Khan 7 Makara Phnom Penh Cambodia (Kingdom of) T +855 (23) 216 899 F +855 (23) 216 405 E mgordon@kpmg.com.kh www.kpmg.com Warrick Cleine Chief Executive/Managing Partner Tax & Corporate Services Department KPMG Limited 10th Floor, Sunway Tower 115 Nguyen Hue Ho Chi Minh City Vietnam
T +84 (8) 3821 9266 F +84 (8) 3821 9267 E warrickcleine@kpmg.com.vn
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Asia Pacific Taxation 2010 Cambodia

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Asia Pacific Taxation 2010 Cambodia

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Asia Pacific Taxation

Cambodia 2010 Edition

Cambodia Asia Pacific Taxation 2010 Edition

Anti-avoidance Rules 7.1 7.2 7.3 7.4 7.5

Cambodia Asia Pacific Taxation 2010 Edition

10 Glossary 11 Useful links

Cambodia Asia Pacific Taxation 2010 Edition

Personal Tax Rates Residents

Cambodia Asia Pacific Taxation 2010 Edition

Cambodia Asia Pacific Taxation 2010 Edition

Capital Gains Tax

Cambodia Asia Pacific Taxation 2010 Edition

Cambodia Asia Pacific Taxation 2010 Edition

Tax Depreciation / Capital Allowances

Cambodia Asia Pacific Taxation 2010 Edition

The excess amount can be carried forward to future years.

Cambodia Asia Pacific Taxation 2010 Edition

The minimum tax is exempted for Qualified Investment Project.

Cambodia Asia Pacific Taxation 2010 Edition

The characteristics of each legal entity are as follows:

Public Limited Company

Private Limited Company

Cambodia Asia Pacific Taxation 2010 Edition

Branch office of a Foreign Company

Commercial Representative Office

Cambodia Asia Pacific Taxation 2010 Edition

Foreign Exchange Controls

Cambodia Asia Pacific Taxation 2010 Edition

Cambodia Asia Pacific Taxation 2010 Edition

Resident Withholding Tax

Additional Profit Tax on Dividend Distribution

20% 12% (11/91) 0%

Cambodia Asia Pacific Taxation 2010 Edition

Non-Resident Withholding Tax

Double Tax Agreements

Cambodia Asia Pacific Taxation 2010 Edition

Cambodia Asia Pacific Taxation 2010 Edition

Controlled Foreign Company (CFC) Provisions

Cambodia Asia Pacific Taxation 2010 Edition

Employment Income / Employee Benefits

Cambodia Asia Pacific Taxation 2010 Edition

Personal Allowances and Rebates of Tax

Up to 500,000 From 500,000 1,250,000

From 1,250,001 8,500,000 From 8,500,001 12,500,000 Over 12,500,000

Cambodia Asia Pacific Taxation 2010 Edition

Indirect and Other Taxes

Value Added Tax

Cambodia Asia Pacific Taxation 2010 Edition

Stamp Duty (Registration Tax)

Property Transfer Taxes

Tax on Unused Land

Cambodia Asia Pacific Taxation 2010 Edition

Tax on Immovable Property (TIP)

9.9 9.10 9.11 9.12

Cambodia Asia Pacific Taxation 2010 Edition

Tax on Public Lighting (TPL)

Accommodation Tax (AT)

Cambodia Asia Pacific Taxation 2010 Edition

Cambodia Asia Pacific Taxation 2010 Edition

KPMG Global Tax website: www.kpmg.com/tax

T +84 (8) 3821 9266 F +84 (8) 3821 9267 E warrickcleine@kpmg.com.vn

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