asia pacific taxation 2010 cambodia

8/4/2019 Asia Pacific Taxation 2010 Cambodia

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Asia PacificTaxation

Cambodia

2010 Edition


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Asia Pacific Taxation

2010 Edition

Contents

1 General 22 Taxation of Companies 3

2.1 Introduction 3

2.2 Residence 3

2.3 Taxable income 3

2.4 Capital Gains Tax 3

2.5 Dividends 3

2.6 Exempt Income 4

2.7 Deductions 4

2.8 Losses 5

2.9 Grouping / Consolidation 5

2.10 Tax Depreciation / Capital Allowances 5

2.11 Amortization of Expenditure 5

2.12 Interest Expenses 5

2.13 Tax Rates 6

2.14 Tax Administration 6

3 Setting up Business 84 Foreign Exchange Controls 105 Tax Incentives 116 International Tax 12

6.1 Double Tax Relief 12

6.2 Withholding Taxes 12

6.3 Double Tax Agreements 13

7 Anti-avoidance Rules 147.1 Introduction 14

7.2 Transfer Pricing 14

7.3 Permanent Establishment 14

7.4 Thin Capitalization 15

7.5 Controlled Foreign Company (CFC) Provisions 15

2010 KPMG International Cooperative (KPMG International), a Swiss entity. Member firms of the KPMGnetwork of independent firms are affiliated with KPMG International. KPMG International provides no clientservices. All rights reserved.

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8 Taxation of Individuals 168.1 Introduction 16

8.2 Residence 16

8.3 Employment Income / Employee Benefits 16

8.4 Exempt income 16

8.5 Deductions 17

8.6 Personal Allowances and Rebates of Tax 17

8.7 Tax Rates 17

8.8 Tax Administration 17

9 Indirect and Other Taxes 189.1 Social Security Tax 18

9.2 Value Added Tax 18

9.3 Customs Duty 19

9.4 Excise Duty 19

9.5 Stamp Duty (Registration Tax) 19

9.6 Property Transfer Taxes 19

9.7 Tax on Unused Land 19

9.8 Tax on Immovable Property (TIP) 20

9.9 Payroll Tax 209.10 Inheritance Tax 20

9.11 Gift Tax 20

9.12 Other Taxes 20

10 Glossary 2211 Useful links 23


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Summary Data

Corporate Tax Rates

The profit tax rate is 20 percent with special rates for specific industries. There is aminimum 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 0

From 500,000 1,250,000 5

From 1,250,001 8,500,000 10

From 8,500,001 12,500,000 15

Over 12,500,000 20

Non-residents

Non-residents are taxed on the Cambodian source income at the flat rate of 20percent.

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.

2010 KPMG International Cooperative (KPMG International), a Swiss entity. Member firms ofthe KPMG network of independent firms are affiliated with KPMG International. KPMGInternational provides no client services. All rights reserved.

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1 General

The principal taxation law of Cambodia is the LoT adopted by the National Assembly inJanuary 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 LALoTwas signed into Law in March 2003, and the revised Prakas on Tax on Profit was issuedin December 2003.

Residents are subject to tax on worldwide income, whereas non-residents are subject totax only on Cambodian sourced income. Real regime taxpayers without investmentincentives are subject to a flat profit tax rate of 20 percent. Minimum tax of one percenton total annual turnover is payable regardless of the level of taxable income.

The enterprises established in the Kingdom of Cambodia that have ordinary share capitalof more than 51 percent owned by a foreign parent company can submit a request for achange of tax year to apply a date other than 31 December.

Business enterprises undertaking investment projects may obtain special tax incentivesas approved by the CDC (see 5.0). These incentives were initially provided under theLoI. The LALoI was passed in March 2003. The Sub-decree on the Implementation ofthe LALoI was issued in September 2005. The LALoI makes sweeping changes to theincentives available to QIPs.

VAT is levied on a wide range of taxable goods and services supplied in Cambodia andalso on the importation of goods. VAT was introduced in January 1999 at a rate of 10percent, 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 onsalary deducted during the year is a final tax. Other non-salary Cambodian sourceincome such as interest is subject to withholding tax.

Resident individuals are subject to progressive rates of tax, with a highest marginal rateof 20 percent. Non-resident individuals are subject to salary tax at a flat rate of 20percent.


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2 Taxation of Companies

2.1 Introduction

Corporate taxpayers in Cambodia are classified as either resident taxpayers, or non-resident taxpayers. A resident taxpayer is primarily an enterprise that has a place ofmanagement and carries on business in Cambodia, as defined below. A non-residenttaxpayer is an enterprise that derives Cambodian source income, but does not have aplace of management in Cambodia.

A non-resident taxpayer will be deemed to be Cambodian resident for tax purposes if it isfound 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) onincome derived from both Cambodian and foreign sources income, whereas, a non-resident 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 includingcapital 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 orinvestment assets including immovable assets. Taxable profit shall also include all capitalgains realized from operations other than business operations on immovable financial orinvestment property. The determination of taxable income, and the rules and proceduresfor 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 propertyand other assets are treated as ordinary income and are therefore subject to tax at theprevailing profit tax rate.

2.5 Dividends

A dividend is defined as a distribution of property or money, made by a legal person to ashareholder. A distribution arising from a complete liquidation is specifically excludedfrom the definition of a dividend.


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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 certainconditions.

2.6 Exempt Income

Dividends received from resident companies are not subject to income tax (see 2.5).

2.7 Deductions

Allowable Deductions

Allowable deductions include most expenses incurred in the course of carrying on abusiness, with certain limitations.

The deductibility of charitable contributions is limited to five percent of taxable profit of thetaxpayer.

Depreciation is allowed as a deduction in accordance with the rates determined by the taxprovisions.

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.


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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 forDevelopment of Cambodia to be expired by 2010

0 percent for the profit of QIP during the tax exemption period as determined byCDC

5 percent on gross premiums received in Cambodia for Insurance Companiesengaged in the insurance or reinsurance of life, property or other risks and 20percent 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 theMinistry 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, whichis 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 therate of 5 percent on gross premiums from insurance or re-insurance income and at therate of 1 percent on non-insurance related income. Payments of PTP are due by the 15

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day of the following month.


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The liquidation of the tax on profit is the balance of tax payable after deduction of all taxcredits and PTP and must be paid upon the submission of the annual tax on profit returnto the GDT by the 31

stMarch in the year following the tax year.

The minimum tax1

is a separate and distinct tax from the tax on profits, and is payable bycompanies regardless of whether they are in a profit or loss situation. The minimum taxis 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 notpayable. The minimum tax is calculated at year-end, however it should be totallyliquidated by the monthly PTP

Late payment penalties apply to all tax not paid by the due date.

Tax CreditsTax paid overseas on foreign source income is available as a tax credit, subject to thetaxpayer providing sufficient evidence to substantiate the foreign tax paid. The tax creditis calculated separately for each foreign country and is the lower of the foreign tax paid orCambodian tax payable on foreign source income.

Record Keeping

All books of accounts, accounting records and other documents must be maintained inthe Khmer language and in KHR, and kept for a period of 10 years.

Penalties RegimeTax penalties are imposed for violations of the LoT and its regulations. The level ofpenalty 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 ofreturns, together with interest that is charged at two percent per month.

Finally, certain acts, including tax evasion, can lead to criminal proceedings beinginstigated against directors, managers or shareholders of an enterprise.

1The minimum tax is exempted for Qualified Investment Project.


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3 Setting up Business

The CEL was signed by the King of Cambodia in June 2005. The CEL sets out basicrules and obligations for the establishment and administration of commercial enterprises.Previously, there was no company law in Cambodia, and the establishment of enterpriseswas 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 limitedcompany. 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 atleast KHR 4,000 (KHR four million (approximately USD 1,000). Issued capital can beeither in the form of fully paid in cash or with non-cash items. The capital must be inplace before the company can be incorporated. A private limited company cannot carryout 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 aregistered office in Cambodia and more than 50 percent of its shares are owned byCambodian nationals. A private limited company with Cambodian nationality is referredto as a local company. Under the Constitution of the Kingdom of Cambodia, a localcompany has a right to own land. The Chairman of the Board of Directors and the otherdirectors of a local company can be Cambodian or foreigners.

A majority foreign-owned private limited liability company does not have a right to ownland.


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The name of a private limited liability company must reflect its limited liability status, andsuch 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 officecan undertake commercial operations in Cambodia, and its management and controlshall 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 considereda separate legal entity from its parent company. A CRO is regarded as a cost centre andaccordingly should derive no income from its activities. A CRO is not subject to tax onprofit in Cambodia, however, salary and fringe benefit tax, withholding tax and patent taximposts 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 limitedpartners, who are bound to contribute to the capital of the partnership, but whose liabilityis limited to their capital contribution.


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4 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 circulationand 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 currenciesabroad 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 freelypurchased via the banking system. In particular, the Law states that there should be norestrictions on foreign exchange operations; however, these operations can only beperformed through an authorized financial institution.

It should be noted that the Law does provide for the NBC to implement exchange controlsin the event of a foreign exchange crisis.

There are no restrictions on the establishment of foreign currency bank accounts inCambodia for residents.


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5 Tax Incentives

The CDC is the principal government agency responsible for providing incentives tostimulate investment in Cambodia. The LoI was introduced in 1994 and substantiallyrevised in 2003. The 2003 revisions have been implemented following the promulgation ofthe implementing Sub-Decree in September 2005.

Investors are required to submit an Investment Proposal to either the CDC or the PMIS toapply for a Qualified Investment Project (QIP) status depending on capital level andlocation 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. Thismeans investment incentives would be available to all sectors not included in the negativelist.

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 yearsautomatic exemption, plus a Priority Period that will be determined on an annual basisin the Finance Law. In effect, the tax exemption period could be extend for amaximum of 9 years

2. Accelerated deprecation on manufacturing assets (however, this is not available if theQIP elects to take the profit tax exemption in point 1)

3. Exemption from import duty on production equipment, raw materials and inputs tomanufacture

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 theinvestment license.

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6 International Tax

6.1 Double Tax Relief

A foreign tax credit is available to a resident in respect of foreign taxes paid, subject tocertain 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 non-resident withholding tax.

Payment of withholding tax is due on the 15th


Resident Withholding Tax

A resident taxpayer is required to withhold tax from the following payments of Cambodiansource income to a resident entity:

Payment Tax Rate (%)

Payment for services to a physical person, including management,consulting, and other similar services

15

Payment of royalties for intangible assets and interests in minerals, oil ornatural gas 15

Interest payments made to a physical person or an enterprise, except forinterest paid to a domestic bank or savings institution

15

Income from rental of movable or immovable properties 10

Interest payments on savings account made by a domestic bank orsavings institution to a resident taxpayer

4

Interest payments on a fixed deposit made by a domestic bank orsavings institution to a resident taxpayer

6

Additional Profit Tax on Dividend Distribution

Additional profit tax on dividend distribution (APTDD) is applicable on the distribution ofretained earnings or annual profit after taxes that were subject to the following rates:

ToP rate APTDD rate

0% 20%

9% 12% (11/91)

20% or 30% 0%


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Dividend distributions to Cambodian resident taxpayers, after payment of the APTDD areexempt 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 thedistribution is paid.

Non-Resident Withholding Tax

A resident taxpayer carrying on a business who makes any of the following payments to anon-resident is required to withhold the non-resident WHT:

Payment Tax Rate (%)

Interest 14

Royalties, rent and other payments connected with use of property 14

Compensation for management or technical services 14

Dividends 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 ofcountries 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 Anti-avoidance Rules

7.1 Introduction

There is no general anti-avoidance provision in the Cambodian tax law.

7.2 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 theGDT 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 haveundertaken in the transactions.

A related party relationship is one where there is a 20 percent or more groupshareholders relationship.

7.3 Permanent Establishment

A PE is defined in Cambodia as having a fixed place of business in the Kingdom ofCambodia, the branch of a foreign company or an agent resident in the Kingdom ofCambodia, through which the non-resident person carries on their business. The termPE also includes any other association or connection through which a non-residentperson engages in economic activity in the Kingdom of Cambodia.

The term economic activity is explained as the regular, continuous or time to time activityof a person, whether or not for profit, in the supply of, or the intent to supply, of goods andservices to other persons for the purpose of obtaining any benefit.

The Cambodian tax law further states that a PE includes the following forms of businessactivity 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 otherpersonnel 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 willultimately decide on a case-by-case basis whether an enterprises activities constitute aPE.

As Cambodia has not entered into any DTAs with other countries, the PE provisionsunder 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 thedeductibility of interest (see 2.12).

7.5 Controlled Foreign Company (CFC) Provisions

There are no CFC provisions in Cambodia.


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8 Taxation of Individuals

8.1 Introduction

Individual residents in Cambodia are liable to personal income tax/tax on salary onCambodian and foreign source income, whereas non-residents are subject to income taxon Cambodian source income only. A credit for foreign income tax paid is allowed againstCambodian income tax. The tax credit is calculated separately for each foreign countryand is the lower of the foreign tax paid or Cambodian tax payable on foreign sourceincome.

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 placeof abode in Cambodia, or the person is present in Cambodia for more than 182 daysduring any 12 month period.

8.3 Employment Income / Employee Benefits

Individuals receiving remuneration in the course of employment are subject to personalincome 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 thetaxable value of the fringe benefits provided to their employees. The tax rate is currently20 percent and it is payable monthly. The actual cost of providing the benefit will normallybe 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 incometax 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 DeductionsEmployees are not allowed any deductions against their salary income as employees arenot 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 )

75,000

Dependent spouse (must be housewife) 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 0

From 500,000 1,250,000 5

From 1,250,001 8,500,000 10

From 8,500,001 12,500,000 15

Over 12,500,000 20

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 theGDT by the 15

thday of the following month.

Currently the Cambodian Tax Law does not require a resident individual to submit anannual personal income tax return to the GDT. Accordingly, the monthly salary taxdeduction is considered to be a final tax for individuals.


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9 Indirect and Other Taxes

9.1 Social Security Tax

There is no social security tax in Cambodia.

9.2 Value Added Tax

VAT is chargeable on a wide range of goods and services supplied in Cambodia and onthe importation of goods. The basic principle of VAT is to charge tax at each stage ofproduction, allowing each supplier credit for the tax paid, so that the VAT eventuallyimpacts 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 tointernational 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 30days 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 thefollowing month.

VAT is payable at 10 percent on imports by reference to the value of the import, includingany customs duty, insurance and freight charges.

9.3 Customs Duty

Customs duty is levied on certain goods entering Cambodia. The rates vary dependingon the type of goods entering Cambodia. Currently, the duty rates are 7 percent, 15percent, 20 percent, and 35 percent.

As a member of ASEAN, Cambodia has implemented tax tariff reduction schedule underthe Common Effective Preferential Tariff Scheme for the ASEAN Free Trade Area (CEPTfor 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 forinvestment project undertaken in Cambodia.

9.4 Excise Duty

See 9.3.

9.5 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 acquiringthe asset, within 3 months from the date of the execution of the agreement to transfer thetitle.

9.7 Tax on Unused Land

A tax is levied on unused land and the registered owner of the land is responsible for thepayment of the tax.


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Tax on unused land is based on two percent of the market price per square meter asdetermined by the Committee for the Valuation Unused Land and is due to be paidannually by September 30.

9.8 Tax on Immovable Property (TIP)

TIP was recently created in the 2010 Law on Financial Management (LFM) to be imposedon 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 forimplementation of the TIP. This TIP will be collected every year at the rate of 0.1 percenton the value of the immovable property that is more than the threshold ofKHR100,000,000 (approximately USD25,000). The value of the immovable property is

assessed by the Assessment Committee, which was set up by the Ministry of Economyand Finance.

The deadline for paying the TIP is 30 September each year.

9.9 Payroll Tax

There is no payroll tax in Cambodia.

9.10 Inheritance Tax

There is no inheritance tax in Cambodia.

9.11 Gift Tax

There is no gift tax in Cambodia.

9.12 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 thatapplies 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 3Domestic and international air ticket 10

Entertainment services 10

Cigarettes 10

Cigars 25

Beers 252

2Prior 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 onbusiness activities in Cambodia are required to pay by March 31. A patent tax certificatewill 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 anddomestically manufactured, at each stage of supply. The tax rate is three percent of thevalue of the taxable product inclusive of taxes but not the TPL nor VAT. The tax is

payable on a monthly basis, by the 15

th

day of the following month.The revenue from the collection of this tax shall be used to improve public lighting in citiesand the provinces.

Accommodation Tax (AT)

AT is a tax on the provision of hotel accommodation services. AT is levied at the rate oftwo percent on hotel accommodation services, inclusive of other services charges and allkinds of taxes but exclusive of the AT itself and VAT.

Payment of AT to the GDT is due on the 15th



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10 Glossary

APTDD Additional Profit Tax on Dividend Distributions

AT Accommodation Tax

CDC Council for the Development of Cambodia

CEL Commercial Enterprise Law

CRO Commercial Representative Office

DTA Double Taxation Agreement

GDT General Department of Taxation

LALoI Law on Amendment on the Law on Investment

LALoT Law on Amendment on the Law on Taxation

LoI 1994 Law on Investment

LoT 1997Law on Taxation

NBC National Bank of Cambodia

QIP Qualified Investment Projects

PE Permanent Establishment

PMIS Provincial/Municipality Investment Sub-Committees

PSC Production Sharing Contract

R&D Research and Development

TIN Tax Identification Number

TIP Tax on Immovable Property

VAT Value Added Tax


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11 Useful links

Further to the information contained in the following sections, information anddevelopments regarding tax laws in Cambodia can be obtained from the followingwebsites.

KPMG Global Tax website: www.kpmg.com/tax
http://www.kpmg.com/taxhttp://www.kpmg.com/taxhttp://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 [email protected]

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 [email protected]

www.kpmg.com

2010 KPMG International Cooperative (KPMG International), a Swiss entity. Member firms of the KPMG networkof independent firms are affiliated with KPMG International. KPMG International provides no client services. Nomember firm has any authority to obligate or bind KPMG International or any other member firm vis--vis third parties,

nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMGInternational, a Swiss entity.

The information contained herein is of a general nature and is not intended to address the circumstances of anyparticular individual or entity. Although we endeavour to provide accurate and timely information, there can be noguarantee that such information is accurate as of the date it is received or that it will continue to be accurate in thefuture. No one should act on such information without appropriate professional advice after a thorough examination ofthe particular situation.
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