CAMBODIA

TAX BOOKLET
2016

Disclaimer: All information is considered correct as of the publication date; however it is not intended to
be relied upon. For the most up-to-date information, please read the Cambodia Business Brief on our
website at www.vdb-loi.com.
 VDB LOI LIMITED 2016
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Published by VDB Loi Limited Januray 2016

Printed in Cambodia by Nova Cambodia

Quick Reference Tax Rate Tables
Tax on Profit
Type TOP rate
Standard 20%
Oil or natural gas production sharing contract and the 30%
exploitation of natural resources, including timber, ore,
gold, and precious stones
Gross premiums received in the tax year for the insurance 5%
or reinsurance of risk in Cambodia
Tax exemption period, such as QIP tax holiday 0%

Tax on Salary
Taxable monthly salary
Khmer Riel (KHR) Equivalent to Progressive
US$* tax rate
From 0 - 800,000 0 - 200 0%
From 800,001 - 1,250,000 200 - 312.50 5%
From 1,250,001 - 8,500,000 312.50 - 2,125 10%
From 8,500,001 - 12,500,000 2,125 - 3,125 15%
Over 12,500,000 3,125 20%

*Using the exchange rate of KHR4,000:US$1

Page 1
Withholding Tax

Resident withholding tax

Type of payment Rate
Services 15%
(except those provided by real regime taxpayers)
Royalties 15%
Interest payments to non-financial institutions 15%
Rental payments 10%
Interest paid by a domestic bank or savings institution on 6%
fixed term deposits
Interest paid by a domestic bank or savings institution on 4%
non-fixed term deposits

Non-resident withholding tax

Type of payment Rate
Royalties, rent and other income related to property 14%
Interest payments 14%
Management and technical services 14%
Dividends 14%

Registration Tax

Registration
Item
Tax rate
On transfer of ownership of all immovable property and 4%
all means of transportation including passenger vehicles
On transfer of ownership or possession of shares in 0.1%
a Cambodian company and registering government
contracts
On certain legal documents KHR1,000,000

2
Specific Tax

Goods/Services Rate
Local and international air tickets sold in Cambodia 10%
Entertainment services 10%
Locally produced cigarettes and cigars 10%
Locally produced beverages (excluding beer) 10%
Lubricant, brake oil, raw material for producing engine oil 10%
(imported)
Local and international telecommunications services 3%
Locally produced beer 25%

Other Taxes
Item Rate Tax base
Minimum Tax 1% Turnover
Fringe Benefit Tax 20% Value of fringe benefit
Property Tax 0.1% Value of property as per the
Property Evaluation Commission
Patent Tax For companies, fixed at KHR1,140,000
(approximately US$285)
Public Lighting Tax 3% Sales value of alcohol and
cigarettes/cigars
Accommodation Tax 2% Room charges and other services
Tax on Property Rental 10% Gross rental income
Unused Land Tax 2% Value of land as per Unused
Land Valuation Commission

Page 3
Contents
Registration............................................................................. 8
Tax Audits............................................................................... 10
Tax on Profit............................................................................ 11
Residency............................................................................... 11
Rates of tax............................................................................ 11
Prepayment of Profit Tax....................................................... 12
Tax holidays............................................................................ 12
Calculation of taxable profit.................................................. 13
Deductible expenses............................................................... 13
Depreciation........................................................................... 15
Utilization of losses................................................................ 16
Minimum Tax.......................................................................... 17
Withholding Tax...................................................................... 18
Overview................................................................................ 18
Resident WHT........................................................................ 18
Non-resident WHT................................................................. 19
Additional Dividend on Distribution Tax................................ 19
Deductibility of withholding taxes......................................... 20
Tax on Salary........................................................................... 21
Overview................................................................................ 21
Residency................................................................................ 21
Taxable salary......................................................................... 21
Deductions............................................................................. 21
Rates of tax............................................................................ 22
Fringe Benefit Tax.................................................................. 22
National Social Security Fund................................................ 22
Value Added Tax.... ................................................................. 23
Overview................................................................................ 23
Scope of application............................................................... 23
Sale of land and buildings ..................................................... 23
Non-taxable goods and services............................................ 23
Registration............................................................................ 24
Rates of tax........................................................................... 24
Basis of taxation.................................................................... 25

Page 5
Specific Tax on Certain Merchandise and Services................... 26
Overview................................................................................ 26
Rates of tax........................................................................... 26
Basis of taxation.................................................................... 27
Customs Duty.......................................................................... 28
Import duties......................................................................... 28
Export duties.......................................................................... 28
Other Taxes.............................................................................. 29
Tax on property rental........................................................... 29
Stamp tax.............................................................................. 29
Patent tax.............................................................................. 29
Registration tax..................................................................... 29
Unused land tax..................................................................... 30
Accommodation tax.............................................................. 31
Public lighting tax.................................................................. 31
Property tax........................................................................... 31
Administration........................................................................ 32
ASEAN Economic Community................................................... 34
Transfer Pricing........................................................................ 35
Qualified Investment Projects.................................................. 36
Penalties.................................................................................. 37

6
Abbreviations

Term Definition
ADDT Additional Dividend Distribution Tax
AEC ASEAN Economic Community
ASEAN Association of Southeast Asian Nations
AT Accommodation Tax
CDC Council for the Development of Cambodia
DTA Double Taxation Agreement
FBT Fringe Benefit Tax
GDT General Department of Taxation
LOT Law on Taxation
MT Minimum Tax
NSSF National Social Security Fund
PLT Public Lighting Tax
PPT Prepayment of Profit Tax
QIP Qualified Investment Project
ST Specific Tax on Certain Merchandise and Services
TOP Tax on Profit
TOS Tax on Salary
VAT Value Added Tax
WHT Withholding Tax

Page 7
Registration
There are three regimes under the tax law in Cambodia: real regime,
estimated regime and simplified regime, however in practice, Cambodia
maintains only two systems of taxation, the real regime and the estimated
regime.
The real regime is a formalized system of taxation and incentives, with
taxpayers subject to audits. The estimated regime is a more informal
system of levying taxes that by default applies to those small businesses
that are not required to register for the real regime.
General Department of Taxation (GDT) Notification No. 1734 on Business
and Organizations Tax Registration Obligations dated 10 October
2013 restates the tax registration requirements and obliges the following
businesses to register as real regime:
Legal form of the enterprise: private limited company, joint
venture company, religious organizations, charities, non-profit
organizations and similar.
Level of turnover: other business entities that have annual revenue
of KHR500 million (approx. US$125,000) or more from the sale of
goods, KHR250 million (approx. US$62,500) from the provision of
services or KHR125 million (approx. US$31,250) from contracts
with the State or over a three-month period, revenue that exceeds
KHR125 million (approx. US$31,250) from the sale of goods, KHR60
million (approx. US$15,000) from the provision of services or KHR30
million (approx. US$7,500) from contracts with the State.
Business activity: import-export and Qualified Investment Projects
(QIPs)
A recently issued Prakas and GDT notification on tax registration (Prakas
No. 1139 MEF.Prk dated 9 October 2014 and Notification No. 3388 GDT
dated 20 October 2014) specify further tax registration requirements for
both real and estimated taxpayers. The key change is that at least one of
the principals of an entity must appear in person at the GDT at the time of
registration. Existing taxpayers registered prior to 1 November 2014 must
also fulfill these new requirements.

8
Notification No. 600 on the Enhancement of the Implementation of
the Real/Self-Declaration Regime dated 6 March 2014 provides that
registered taxpayers can inform the GDT of other businesses of similar size
or activity that are still operating under the estimated regime when they
should actually be registered; and also that any business transferring from
estimated regime to real regime must undergo a precise assessment.
These three recently issued notifications support the general move
towards an all-encompassing real regime system.

Page 9
Tax Audits
Real regime taxpayers may be subject to tax audits at the discretion of
the GDT. They may be conducted up to 10 years after the initial filing
of taxes.
There are three kinds of tax audit:
i. Desk audit: This level of control is designed to verify the accuracy
of declared information by cross-checking it with the tax return
or other information requested by the tax administration.
ii. Limited audit: This audit is more expansive. Government tax
auditors will use all available resources, including visits to
the taxpayers place of business, to verify the accuracy of the
taxpayers returns.
iii. Comprehensive tax audit: In practice, this is the same as a
limited audit, only more extensive and thorough. The important
distinction between a comprehensive audit and a limited audit
is that once the audit has been completed and the taxpayer has
addressed any discrepancies, all tax returns covered by the audit
will be closed.
Although a comprehensive tax audit is normally final, if the tax
administration has reason to believe a taxpayer has committed tax
evasion or fraud they may re-open the case.

10
Tax on Profit
Residency
Tax on Profit (TOP) applies to both resident and non-resident persons,
but residents are taxed on their worldwide income.
Legal persons are considered residents of Cambodia for tax purposes
if the principal place of business is in Cambodia or if they are managed
from Cambodia, therefore a company incorporated in Cambodia is
taxed as resident.
A non-resident taxpayer will be deemed to be a Cambodian resident
for tax purposes if such taxpayer is found to have a permanent
establishment in Cambodia. In such an instance, the non-resident will
be subject to tax in Cambodia in respect of its Cambodian-sourced
income.
Income derived from Cambodian-based activities or assets located in
Cambodia is determined to be Cambodian-sourced.

Rates of tax
The TOP rates are as follows:

Type TOP rate

Standard 20%
Oil or natural gas production sharing contract and the 30%
exploitation of natural resources, including timber, ore,
gold, and precious stones
Gross premiums received in the tax year for the 5%
insurance or reinsurance of risk in Cambodia
Tax exemption period, such as QIP TOP holiday 0%

Page 11
For insurance companies, the 5% on premiums applies only to
insurance activities; any income from other non-insurance services
is taxed as normal at the standard 20% rate on taxable profit. The
insurance private sector and GDT are currently in discussions and
reviewing what constitutes insurance products that are taxable on the
5% on premium basis, therefore this may change in the near future.

Prepayment of Profit Tax

Taxpayers are subject to a Prepayment of Profit Tax (PPT) calculated at
1% of monthly turnover. Note that this is not actually a separate tax,
rather it is a prepayment of Minimum Tax (MT). The payment is made
monthly and is offset against the MT or TOP, whichever is higher, due
at the annual tax liquidation at year-end.
In order to calculate PPT, we must consider what is included in
turnover. Turnover, also referred to as revenue, is not a clearly
defined term under the Law on Taxation (LOT). In practice, turnover/
revenue should generally be interpreted broadly to include all income
received by the taxpayer, including interest income and proceeds from
the disposal of assets. This also includes all taxes with the exception of
Value Added Tax (VAT).

Tax holidays
Foreign investors seeking to make significant investments into
Cambodia outside of the sectors restricted by law may apply to the
Council for the Development of Cambodia (CDC) for QIP status.
Most QIP companies benefit from a holiday from TOP during which
investment activity income is exempt from both TOP and PPT.
The tax holiday is divided into three sections: (1) the trigger period,
which begins upon issuance of the Final Registration Certificate and
ends either upon the first year of profit or three years after revenue
is first derived; (2) a three-year period; and (3) the priority period,
which is between 0 and 3 years, depending on the industry and level
of investment.

12
Calculation of taxable profit
Taxable profit must be calculated on an annual basis by adjusting the
accounting profit for expenses that are not allowable or are subject to
limitation under the tax law, such as entertainment expenses.
Income included in calculating taxable profit comprises business
income from the operations of the entity, along with other types
of income, such as capital gains from the disposal of assets, rental
income, royalty income and interest income.

Deductible expenses
As a general rule, expenses are deductible if they are paid or incurred
in a tax year to carry on the business of the taxpayer. There are further
provisions which disallow specific types of expenses as follows:

Type of expense Deductibility

Personal expense Non-deductible
Donations and grants (does not include Non-deductible
charitable contributions)
Tax payments and tax penalties and Non-deductible
interest on penalties
Loss on sale of property between related Non-deductible
parties
Expense not related to the business, Non-deductible
extravagant expense of little use to the
business
Amusement, recreation or Non-deductible
entertainment expense
WHT, TOS and FBT paid on behalf of Non-deductible
recipients
Expense pertaining to previous or Non-deductible
subsequent periods

Page 13
 Type of expense Deductibility
Provisions Generally non-
deductible, with some
exceptions
Depreciation Deductible when
calculated using the
method set out in the
tax law
Unpaid expense due to unrelated parties Deductible if it is a
genuine liability
Unpaid salary Deductible if paid within
60 days after the end of
the tax year
Related party expense that is not salary Deductible if paid within
180 days after the end
of the tax year
Interest expense Deduction is limited
to an amount equal to
50% of adjusted profit
without taking into
account any interest
income or expense, plus
the interest income
Charitable contribution Deduction limited to an
amount equal to 5% of
taxable profit, without
taking the charitable
contribution deduction

A further limitation on the deductibility of interest expenses was

introduced by Instruction No. 151 on the Determination of Enterprises
Interest Expenses, effective from 22 January 2014. For loans from a non-
related party, the allowed interest rate is up to 120% of the market interest
rate and in the case of a related party, cannot exceed the market rate.

14
The market interest rate is issued on an annual basis by the GDT and
is determined by an average of the interest rates of at least five big
commercial banks. The 2015 rate was not available at the time of
publication. For 2014, the market interest rate was 10.15% per annum.

Depreciation
Under Cambodian tax law, depreciation rates and methods are
specified based on the asset class, and therefore, only the depreciation
expense allowed under the rate for the assets particular class may be
deducted in calculating taxable profit.
Depreciation Depreciation
Asset
Rate Method
Tangible Class 1: Buildings and 5% Straight Line
Property basic components
Class 2: Computers, 50% Declining
electronic information Balance
systems, data handling
Class 3: Automobiles, 25% Declining
trucks, office furniture Balance
and equipment
Class 4: All other 20% Declining
tangible assets Balance
Intangible Having no specific 10% Straight Line
Property useful life
Having a specific Over the Straight Line
useful life useful life of
the property
Instead of the tax holiday, QIP companies may elect to benefit from a
special depreciation rate of 40% in the first year of use of the asset in
addition to the normal tax depreciation charge. This special depreciation
rate applies only to tangible assets used in manufacturing and processing
and the asset should be held for a minimum of four years, otherwise the
QIP will be required to add back a portion of the depreciation expense.
Page 15
Utilization of losses
If a company sustains a loss, this can be utilized against future profits
and can be carried forward for up to five years. If profit in the year
following a loss-making year is not sufficient to offset the loss in full,
the remaining loss may be carried forward for a maximum of five years.
The accumulated tax losses can be carried forward if all of the following
conditions are met:
i. There is no change in the business activities of the entity;
ii. There is no change in the ownership of the entity;
iii. The loss is recorded in the tax return that has been submitted to
the tax administration within the period of time as specified in
the tax provisions; and
iv. The GDT has not issued a unilateral tax assessment for any of the
tax years in question.

16
Minimum Tax
MT is a separate and distinct tax from TOP, and is calculated at 1% of
annual turnover. Turnover is not defined under the LOT, but is inclusive
of all taxes excluding VAT.
A taxpayer will be subject to either TOP or MT, whichever is greater. If
only MT is due, this should have already been paid in advance by the
PPT payments, which are also calculated at 1% of turnover.
Note that QIPs are not subject to MT, but will still be required to pay
PPT every month after the conclusion of their TOP holiday period.

Page 17
Withholding Tax
Overview
Certain payments are subject to a withholding tax (WHT) which must
be deducted by the payer at the time of payment. WHT is imposed
at varying rates depending on the transaction type and whether the
payment recipient is a resident or a non-resident.
WHT is a tax on the income recipient; however, the responsibility for
deducting and making payment to the GDT is placed on the party that
makes the payment, referred to as the Withholding Agent.

Resident WHT
Payments of certain Cambodian-sourced income by a resident
taxpayer carrying on a business in Cambodia, to a Cambodian resident,
are subject to the following WHT:

Type of payment to a resident Rate

Services (except those provided by real regime 15%
taxpayers)
All services provided by residents that are not
registered for the real regime tax system.
Royalties 15%
Interest payments 15%
All interest payments other than the interest paid by a
domestic bank or savings institution.
Rental payments 10%
Interest paid by a domestic bank or savings institution 6%
on fixed term deposits
Interest paid by a domestic bank or savings institution 4%
on non-fixed term deposits

18
Non-resident WHT
Non-resident WHT at the rate of 14% is to be deducted from the
following payments to non-residents:
Royalties, rent and other income related to property
Interest
Management and technical services (currently undefined in the
LOT)
Dividends

Additional Dividend on Distribution Tax

If dividends are paid out of earnings that have not been subject to at
least 20% TOP then Additional Dividend Distribution Tax (ADDT) will
apply to the dividends.
Therefore when a dividend is paid out of profit realized during a tax
exemption period, or out of retained earnings that were realized
during a tax exemption period and so not previously subject to TOP,
the dividend will be subject to ADDT at 20%.
Previously, there was a 9% TOP rate that existed for QIPs. Although
QIPs are no longer taxed at the 9% rate, there are QIP companies that
have retained earnings that when earned were taxed at 9%.
The ADDT rates are therefore as follows:

Dividend paid out of earnings subject to TOP at: ADDT rate

0% 20%
9% 11/91
20% or 30% Nil

Page 19
Deductibility of withholding taxes
WHT is a tax on the income recipient and not the Withholding Agent
and hence if the WHT is not deducted from the payment and is borne
by the Withholding Agent, it is not deductible by the Withholding
Agent regardless of whether the expense was grossed up in order to
calculate the tax. This was clarified by Prakas No. 599 on Deductible
Expenses of the Enterprise Regarding the Withholding Tax dated 15
July 2009 which states that if the Withholding Agent bears the cost
of the tax, the Withholding Agent cannot deduct the WHT expense in
their TOP calculation.

20
Tax on Salary
Overview
Employers are liable to deduct Tax on Salary (TOS) from payments
of salaries, wages and other remuneration made to all employees.
Employees that are tax residents of Cambodia are taxed on their
worldwide employment income at progressive rates, whereas non-
residents are taxed only on their Cambodian-sourced employment
income at a flat rate.

Residency
An individual is considered a resident for tax purposes if they fulfill any
one of the following criteria: (1) their residence is in Cambodia; or (2)
their principal place of abode is in Cambodia; or (3) they are present in
Cambodia for more than 182 days in any period of 12 months ending
in the current tax year.

Taxable salary
Salary as defined by the LOT includes 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 and is taxed at
TOS rates.
Payments that are exempt from TOS include refunds for business
expenses incurred by the employee on a work assignment, indemnity
payments upon employee dismissal up to a limit, social security
contributions, and uniforms and equipment required for the
performance of employment duties.

Deductions
Deductions for dependent family members reduce the monthly
taxable base on which TOS is calculated. A deduction of KHR75,000
per month (approximately US$18.75) may be deducted for each minor

Page 21
dependent child under 14, or under 25 and in full-time education, and
a deduction for the same amount for one spouse.

Rates of tax
Non-residents are subject to TOS only on their salary income at a flat
rate of 20%. Residents are taxed at progressive rates as follows:

Taxable monthly salary

Khmer Riel (KHR) Equivalent to Progressive
US$* tax rate
From 0 - 800,000 0 - 200 0%
From 800,001 - 1,250,000 200 - 312.50 5%
From 1,250,001 - 8,500,000 312.50 - 2,125 10%
From 8,500,001 - 12,500,000 2,125 - 3,125 15%
Over 12,500,000 3,125 20%

*Using the exchange rate of KHR4,000:US$1

Fringe Benefit Tax

Employers may also provide employees with non-cash remuneration
such as accommodation and private use of motor vehicles. These
fringe benefits are subject to a flat Fringe Benefit Tax (FBT) of 20% on
the market value of fringe benefits provided to an employee.

National Social Security Fund

Employers that hire eight or more staff must register with the National
Social Security Fund (NSSF) and make NSSF contributions on a monthly
basis. The NSSF contribution goes up to a maximum of KHR8,000
(approximately US$2.00) and provides medical treatment for work-
related injuries and compensation for loss of earning capacity due to
injuries sustained at work.

22
Value Added Tax
Overview
VAT is applicable to the taxable supply of goods and services. An entity
registered under the VAT provisions is required to charge VAT on all
sales of taxable supplies (output VAT). Such entities can offset the VAT
paid on purchases (input VAT) against their output VAT.

Scope of application
Taxable supplies are the supply of goods, services or imports for
taxable sale or for use in producing taxable supplies. Taxpayers must
charge and collect VAT on taxable supplies.
Supply of goods includes the transfer of the rights to movable property,
meaning all property except land or money.

Sale of land and buildings

As per Notification No. 1728 dated 9 October 2013, the GDT has
confirmed that for the sale of land with buildings, real regime taxpayers
are required to charge VAT on the building component (but not on the
land component).

Non-taxable goods and services

In order to promote the provision of certain key public services, specific
taxable supplies have been exempted from VAT. The following is a list
of non-taxable supplies under the LOT:
Public postal services
Hospital, clinic, medical and dental services, and the sale of
medical and dental goods incidental to the performance of such
services
Transportation of passengers by a wholly state-owned public
transportation system
Insurance services
Primary financial services
Imported articles for personal use that are exempt from customs duty

Page 23
 Non-profit activities in the public interest that have been
recognized by the Ministry of Economy and Finance
The supply of electric power and water
If a business makes non-taxable supplies only, it will not be able to
claim any input VAT; the VAT on purchases must be borne as a cost. If
a business makes a mix of non-taxable and taxable supplies, it will be
able to claim a portion of VAT based on the portion of taxable supplies.

Registration
Compulsory VAT registration applies to any real regime taxpayer
who makes taxable supplies. Further, all companies, import/export
businesses and QIPs must register for VAT. Other taxpayers are required
to register as VAT taxpayers if they meet certain turnover thresholds.
Other businesses not compelled to register by law may register
voluntarily.

Rates of tax
Taxable supplies made in or imported into Cambodia are subject to VAT
at one of two rates:

Type of supply Rate

Standard rate 10%
Zero-rated supplies, which include: 0%
Exported goods
Exported services
The supply of international transportation
services
Services in support of the supply of international
transportation
Other specific sectors, including supporting
industries that supply the export-oriented
garment, textile and footwear industries; the
supply of rice; and the import and supply of
certain goods for agricultural purposes

24
Zero-rated supplies are not the same as non-taxable supplies, as it is
possible for entities providing zero-rated supplies to claim input VAT
credit.

Basis of taxation
For local supplies, the cost of the goods or services is the tax base.
For imports, the tax base is the CIF value plus customs duty plus any
Specific Tax.

Page 25
Specific Tax on Certain Merchandise and Services
Overview
Specific Tax on Certain Merchandise and Services (ST) is a form of
excise tax imposed on the importation or domestic production and
supply of certain goods. Tax is levied once only; for imports, this is at
the inward checkpoint, and for domestic goods, it is upon the sale from
the factory if the products are locally produced.
We expect that, in light of the reduction in import duty tariffs as noted
in the Customs Duty section, in future greater emphasis will be placed
on excise tax. Accordingly, it is likely that there will be a number of
changes to the calculation and collection of ST.

Rates of tax
The ST amount due is calculated by applying the applicable rate to the
applicable tax base, as per the table below:

Goods/Services Rate
Local and international air tickets sold in Cambodia 10%
Entertainment services 10%
Locally produced cigarettes and cigars 10%
Locally produced beverages (excluding beer) 10%
Lubricant, brake oil, raw material for producing engine oil 10%
(imported)
Local and international telecommunications services 3%
Locally produced beer 25%

26
Basis of taxation
For locally supplied goods, ST is calculated on the ex-factory selling
price, which was recently changed from 65% of the selling price
excluding VAT and discounts to 90% of the selling price excluding VAT
and ST. For locally supplied services, the tax base is the invoice price of
the services supplied.
For imported goods ST is calculated inclusive of customs duty and the
cost, insurance and CIF value, excluding VAT.

Page 27
Customs Duty
Import duties
There are a number of goods on which import duty applies when these
goods are brought into Cambodia, with some exemptions, including
goods temporarily imported into Cambodia, goods for personal use,
goods exempted by international treaty, humanitarian aid, and imports
for use by a QIP. Exemptions from import duty may also be granted by
the CDC for specific industries.
Customs duty is levied on goods entering Cambodia at rates from 0% to
35%. Cambodia is part of ASEAN and therefore party to the ASEAN Free
Trade Agreement and Common Effective Preferential Tariff scheme.
This requires ASEAN Member States to offer preferential tariff rates
on a broad range of products originating from other ASEAN countries.
Accordingly, the customs duty rates in Cambodia have been reduced
so that now many goods coming from another ASEAN country have a
maximum 5% import duty imposed. The rates are planned to gradually
decrease to 0% by 2018.

Export duties
There are no export duties other than on a limited list of restricted
products at rates of 2% to 10% as follows:

Natural rubber
Uncut precious gemstones
Processed wood
Fish, crustaceans, mollusks and other aquatic products

28
Other Taxes
Tax on property rental
House and land rental tax is set at 10% of gross rental income from
the lease of buildings and land, when the lessor is not a real regime
taxpayer.

Stamp tax
A fiscal stamp tax is due on advertising leaflets and banners, levied at
different bands of rates, based on the dimensions of the advertising
item, the number of letters and whether the lettering is Khmer only or
includes a foreign language.

Patent tax
Patent tax is a registration tax that is paid by all business enterprises
upon establishment of a business and by 31 March on an annual basis
thereafter. Patent tax for companies is currently fixed at KHR1,140,000
(approximately US$285).
Note that with the advent of the new tax registration requirements,
the GDT is also requiring all taxpayers that were registered prior to
1 November 2014 to update their tax registration.

Registration tax
Also referred to as seal tax or stamp duty, registration tax is a tax
imposed on the transfer of ownership or possession of certain types
of property, including the recently introduced levy on the transfer of
shares, which came into effect with the 2013 Financial Management
Law.

Page 29
It is payable by the person who receives the ownership and is applied
to the transfer value at rates as follows:

Registration
Applied on:
Tax rate
Transfer of ownership of all immovable property, 4%
including buildings and other structures, and land
Also includes contribution of immovable property as
capital in kind into a Cambodian company
Transfer of ownership of all means of transportation, 4%
including passenger vehicles
Transfer of ownership or possession of shares in a 0.1%
Cambodian company
Registration of government contracts related to the 0.1%
supply of goods or services

Previously, there was no publicly-issued information on the tax base

to use to calculate the registration tax on the transfer of immovable
property. The Ministry of Economy and Finances Prakas No. 692 MEF.
Prk dated 28 August 2014 now provides this information for all cities
and provinces in Cambodia.
A flat rate of KHR1,000,000 (approximately US$250) applies to the
registration of certain legal documents.

Unused land tax

Land is determined to be unused if it does not have any structure on
it or there is a structure, but it is unused. Unused land tax is levied on
an annual basis at a rate of 2% on the market value per square meter,
with the market value determined by the Unused Land Valuation
Commission. The unused land tax is paid annually by the landowner.
Since the introduction of property tax, it was understood that if

30
property tax is paid on a piece of land, then unused land tax no longer
applies. This was codified under Article 12 of the 2015 Law on Financial
Management dated 18 December 2014.

Accommodation tax
Accommodation tax (AT) is an indirect tax imposed on the supply of
accommodation services at a rate of 2%. AT must be charged by hotels,
hotel apartments, motels, lodges, guesthouses, campgrounds and
similar, but does not include the rental of houses or apartments.

Public lighting tax

Public lighting tax (PLT) is an indirect tax imposed on sales of alcohol
and cigarettes at all stages of supply, on both imports and domestically-
produced goods at a rate of 3%. All types of cigarettes and alcohol
are subject to PLT, including beer, grape wine and spirits, with the
exception of palm wine.

Property tax
Property tax is a direct tax imposed on the value of immovable
property, including land and buildings, on property valued above
KHR100,000,000 (approx. US$25,000) at a rate of 0.1%. The
property value is per the valuation issued by the Property Evaluation
Commission.
Property taxpayers may be individuals or companies. Owners,
possessors or final beneficiaries of immovable property may be
liable for the property tax. A final beneficiary includes those with the
right to use the property, and so includes long-term lessees.

Page 31
Administration

Tax Filing and payment date

Tax on Profit TOP must be paid and filed within 3 months of
the end of the tax year, which is normally 31
December unless an application to amend the
tax year is approved.
Prepayment of PPT must be paid and filed by the 15th of the
Profit Tax following month.
Minimum Tax MT must be paid at the same time the annual
TOP return is due, that is, 3 months after the
end of the tax year.
Withholding Tax WHT must be paid to the GDT by the 15th of
the month following the month in which the
payment is made or accrued.
Additional ADDT must be paid and filed on the PPT
Dividend on return, by the 15th of the month following the
Distribution Tax month the dividend was paid out.
Value Added Tax VAT is to be paid on the 20th of each month
for the VAT liabilities accrued during the previ-
ous month.
VAT on imported goods is collected by the
customs administration at the time of import.
Tax on Salary TOS and FBT are deducted by the employer
and remitted to the GDT by the 15th of the
month following the month that the salary
and fringe benefits were provided to the
employee.

32
 Tax Filing and payment date
Specific Tax on ST on domestic sales must be paid and de-
Certain clared on the PPT return, by the 15th of the
Merchandise and month following the time of supply.
Services
ST on imported goods is due at the time of im-
port, and is collected by the customs adminis-
tration along with VAT and customs duty.
Customs Duty Customs duty is collected by the customs
administration at the time of import.
Patent Tax Patent tax is payable by 31 March each year.
Registration Tax Registration tax is due within 3 months of the
transfer.
Unused Land Tax Unused land tax is due on an annual basis by
30 September each year.
Accommodation For real regime taxpayers, AT is declared in the
Tax PPT return, due with payment by the 15th day
of the month following the time of supply.
Estimated regime taxpayers supplying ac-
commodation must pay by the 10th of the
following month.
Public Lighting Tax PLT is declared in the PPT return, due with
payment by the 15th day of the month follow-
ing supply.
Property Tax Property tax is due on an annual basis by 30
September each year.

Page 33
ASEAN Economic Community
The aim of the ASEAN Economic Community (AEC) is to provide
regional economic integration by creating a single market across
ASEAN countries, similar to the European Union. The purpose of
this is to encourage economic growth in all participating countries
by allowing a free flow of human resources, goods, services and
investment between countries.
From a tax perspective, the AEC will work towards establishing
agreements on the avoidance of double taxation by ASEAN countries
and will aim to enhance the withholding tax structure by removing
withholding taxes that may apply on interest, royalty, dividend and
service fee payments.

34
Transfer Pricing
There are currently no formal transfer pricing regulations in Cambodia,
however we understand that these may be implemented within the
next year. Further, the current practice of some officers of the GDT is
to invoke Article 18 of the LOT, which gives the GDT authority to adjust
the allocation of income and expenses between enterprises under
common ownership (which are defined as entities where 20% or more
of the value or equity is owned by a person).
Therefore, there is some authority to apply the arms length principle
in this respect, so that the GDT does not find reason to make such
adjustments. The arms length principle is the standard that has been
universally adopted in international tax law. In its simplest form it says
that related parties must adopt conditions to their transactions in
accordance with what independent parties would agree to under the
circumstances.

Page 35
Qualified Investment Projects
Some types of investment may be eligible to be approved as a QIP by
the CDC. QIP companies benefit from:
i. TOP holiday period, which could be 3 or more years, during which
they are also exempt from PPT
ii. MT exemption
iii. Special depreciation rate of 40% in the first year on manufacturing
and processing equipment. This is only available if the TOP
holiday is not taken
iv. Import duty exemption on the import of construction materials
and equipment

We understand that the Law on Investment is currently being reviewed

and we expect to see changes to the types of QIP and the nature and
extent of tax holidays later in 2016.

36
Penalties
Tax penalties are imposed for violations of the LOT and its regulations,
ranging from 10% to 40% of the tax amount due, together with interest
that is charged at 2% per month.
Generally, ordinary negligence is subject to a penalty of 10% of the
unpaid taxes, while serious negligence is subject to 25%. Obstructing
the operations of the tax administration, fraud or other criminal acts
carry more substantial penalties of 40% of the unpaid taxes.
Other penalties may include fines, closure of business and potentially,
criminal sanctions, according to the nature and severity of the offense.
Repeat offenses generally garner more severe penalties.

Page 37
 Jean Loi Laysym Sim
Managing Partner Partner
[email protected] [email protected]

Robert Porter Yumi Ishimoto Sivila Khim

Director Director, Japanese Desk Director
[email protected] [email protected] [email protected]

OFFICES IN CAMBODIA AND THROUGHOUT THE REGION

Cambodia Laos Vietnam
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The Cityloft Sudirman Suite 1119 No. S-204, Tha Pyay Kone Ward Japan
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38
Notes
Notes
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Laos
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