Seize the opportunity - Investing in Cambodia - 2022 and beyond - KPMG Global
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Investing in Cambodia
Seize the
opportunity
2022
and beyond
kpmg.com.kh
INVESTING IN CAMBODIA 2022 | 1
About KPMG
Who we are
KPMG is one of the world’s leading professional services firms. We are
proud of our firm’s strong and established reputation, a reputation that
is built on a long history of independence, integrity and objectivity.
It is what drives us to deliver clear and practical advice to help our
clients grow and succeed in their chosen field.
It is what makes us committed and successful leaders in our
profession.
Global presence
KPMG firms operate in 145 countries and territories, and in FY21,
collectively employed more than 236,000 people, serving the needs
of business, governments, public-sector agencies, not-for-profits
and through KPMG firms' audit and assurance practices, the capital
markets. KPMG is committed to quality and service excellence in all
that we do, bringing our best to clients and earning the public's trust
through our actions and behaviors both professionally and personally.
KPMG in Cambodia
KPMG in Cambodia was established in 1994. Today, with over 350
professionals, KPMG is one of the largest professional services firms in
Cambodia with a balanced mix of international and local clients.
In Cambodia, our local experience, enhanced by technical and industry
knowledge of our global network, means we have the tools and
knowledge to gain a deep understanding of our clients’ businesses. It
enables our professionals to turn knowledge into value for the benefits
of our clients, our people, and the capital markets.
Our leadership
KPMG in Cambodia commits to invest in our people, services and
quality to help our clients achieve sustainable and strong business
performance.
We are also committed to appropriately delivering on our capital
markets responsibilities, as well as assisting our clients in effectively
communicating true business performance to stakeholders.
Supporting our communities
KPMG in Cambodia has a long history of supporting the communities
in which we live and work. This contribution takes the form of our
people’s time, knowledge and experience, as well as our financial
donations and grants.
Lim Chew Teng
Managing Partner
02 | INVESTING IN CAMBODIA 2022
Table of contents
About KPMG Cambodian Setting up a
economy business in
Cambodia
02 04 09
Accounting Other compliance Cambodia tax
and reporting requirements guide
requirements
10 13 14
Glossary
36
INVESTING IN CAMBODIA 2022 | 03
Cambodian economy overview
Cambodia's GDP dropped by Market Overview
0.2% in 2020 and is estimated Economy
to grow 3.6% for the year 2021
Cambodia has been one of the top-performing economies in Asia. As the
and 10.2% for 2022. The infla- country emerges from the social and economic effects of the Covid crisis, a
tion rate was 2.9% in 2020 and rapid return to the high levels of growth seen pre-Covid is now anticipated.
is projected to be 2.5% in 2021 Cambodia has a strong labor protection regime, and while wages are rising
and 3.8% in 2022. with the development of the economy, the country still remains competitive
in the region. In response to global trade concerns, the government has
introduced a number of measures to reduce production and supply costs
and encourage further foreign investment.
GDP, GDP Growth, Inflation
35 32.8 12
29 10
30 27.5
27.1 10.2
24.6 8
25
7.5 7.1 6
20 3.6 3.8
2.8 2.9 4
2.3
15
2
2.5
10
0
0.2
5 -2
0 -4
2018 2019 2020 2021e 2022f
GDP by Sector (%)
15
12.4
11.6 11.3 10.9 10.7
10 11.3
6.8 6.2
5
2.1 1.8 2
1.1
-0.5
0
-2.5
-5
-8.9
-10
Industry Service Agriculture
Source: Economic Intelligence Unit
04 | INVESTING IN CAMBODIA 2022
Banking System
Limited access to capital is one of the constraints of doing business in
Cambodia. Commercial banks are primary sources of funding.
From March 2018, the minimum capital requirements for banking
institutions are as follows:
— US$50 million for commercial — US$15 million for specialized
bank incorporated as foreign bank incorporated locally
branch, whose parent bank is — US$30 million for micro
rated "Investment Grade" finance deposit-taking
— US$75 million for commercial institutions
bank incorporated as foreign — US$1.5 million for micro-
branch, whose parent bank is finance institutions.
NOT rated "Investment Grade";
a foreign subsidiary or a local
company
Currency
The local currency, Khmer Riel (KHR), was introduced in 1980. The
Cambodian economy is classified as partially dollarized, given that the
US dollar circulates in conjunction with an official national currency, as
opposed to fully dollarized economies where the dollar is the only legal
tender. 80% of deposits and credits in the banking system are made in
United States Dollars (US$).
Land Ownership Business Sectors
The law restricts foreigners Garment, light manufacturing,
from owning land in Cambodia. automotive parts, luggage and
Foreigners are allowed to have furniture continue to be the
a renewable long-term lease for country’s key growth drivers, and
up to 50 years plus 50 years and attract new foreign investments
freehold ownership of certain each year.
condominiums.
Advantages of investing in Cambodia
ASEAN membership offers regional
trade benefits
WTO member since 2004 increasing
trade integrations
Duty free or preferential export access to
most developed economies
Favorable investment environment
One of Asia’s lowest labor costs and a
dynamic workforce
INVESTING IN CAMBODIA 2022 | 05
The Cambodia Cambodia Securities Exchange (CSX)
The Regulator
Securities Exchange
The Securities and Exchange Commission of Cambodia (SECC) regulates
(CSX) is a joint the Cambodia Securities Exchange (CSX) in Cambodia. The SECC
venture between the is established under the law on the Issuance and Trading of Non-
Cambodian Ministry government Securities.
Companies Listed on CSX
of Economy and
As of March 2021, there are 7 Companies listed on the CSX, including
Finance, which holds three State-owned enterprise (SOEs) - Phnom Penh Water Supply
55%, and the Korea Authority (PWSA), Phnom Penh Autonomous Port (PPAP), Sihanoukville,
Exchange (KRX), Autonomous Port (PAS), three private companies - Grand Twins
International (Cambodia) Plc (GTI), Pestech (Cambodia) Plc., Phnom Penh
which holds 45%. SEZ Plc (PPSP), and one bank – ACLEDA Bank Plc.
Corporate bonds
As of March 2021, 6 companies have issued corporate bonds on the
Nge Huy CSX – Hattha Kasekor Limited (HKL), LOLC (Cambodia) Plc. (LOLC),
Partner Advanced Bank of Asia Limited (ABA), Prasac Microfinance Institution
Audit services Plc, RMA (Cambodia) Plc, and Phnom Penh Commercial bank.
Key Operating Rules
Minimum trading unit
Price variance ranges from KHR10 to KHR1000
dependent on share price.
Market hours, trading times
Market is open from 8:00 am to 3:00 pm,
Monday-Friday and divided into three sessions.
Daily price limit
+/- 10% of the base price, or KHR10 where the
base price is below KHR100.
06 | INVESTING IN CAMBODIA 2022
Key Settlement Rules
Settlement time Clearing, Good faith deposit Account opening
Settlement is settlement fees A good faith deposit of 100% Securities firms open
performed two days Clearing fees are of the cash value of the trade accounts with a cash
after the trade, T+2, 0.05% of the value of is required from the buyer and settlement agent and with
at 8:30am the settled trade 100% of the securities to be the securities depository
traded required from the seller
Stock Trading on the Exchange
The SECC requires trades on the stock exchange to be settled after two days.
ACLEDA Bank Plc, Canadia Bank Plc, Bank for Investment and Development of Cambodia, Cambodian
Public Bank Plc, and the B.I.C (Cambodia) Bank Plc are licensed as cash settlement agents by the SECC.
ACLEDA Bank Plc., Tricor Securities Services Plc., and Phnom Penh Securities Plc. are licensed as securities
registrar, transfer agent, and paying agent by the SECC.
Tax Incentives for Listing on CSX
Equity securities
Tax Type Tax Incentive Period Criteria/Conditions
ToI Reduction of the annual Up to 3 years from ToI reduction rate shall be based on the issuance size in proportion to the voting rights, i.e., issuance size of 1%
ToI payable by 2.5% listing date shall receive a 2.5% ToI reduction, with a maximum ToI reduction rate of 50% for issuance size of at least 20.001%
to 50%
WHT 50% reduction in WHT 1 January 2021 to Applies to public investors who are holding and/or buying/selling of stock securities listed in the CSX
on dividends 31 December
ToI, WHT, Tax debt waiver N-3 to N-10 For companies/enterprises that fulfil the criteria for listing in the primary market
VAT, STCMS,
AT, PLT N-2 to N-10 SMEs that fulfil the criteria for listing in the secondary market
Debt securities
Tax Type Tax Incentive Period Criteria/Conditions
ToI Reduction of the annual ToI Up to 3 years from ToI reduction rate shall be based on the issuance size in proportion to the total assets, i.e.,
payable by 2.5% to 50% listing date issuance size of 1% shall receive a 2.5% ToI reduction, with a maximum ToI reduction rate of
50% for issuance size of at least 20.001%
WHT 50% reduction in WHT on interest 1 January 2019 to 31 Applies to public investors who are holding and/or buying/selling of government bond, debt
December 2021 securities listed in the CSX
WHT 6% WHT for interest payments No specific period/limit Applies to debt securities listed in the CSX
to resident taxpayers (same as specified under the
interest payments by local banks Prakas
on fixed deposit accounts)
ToI, WHT, VAT, Tax debt waiver N-3 to N-10 For companies/enterprises that fulfil the criteria for listing in the primary market (either debt or
STCMS, AT, equity securities)
PLT
N-2 to N-10 SMEs that fulfil the criteria for listing in the secondary market (either debt or equity securities)
The abovementioned incentives may be revoked if the taxpayer fails to comply with its monthly and/or annual
tax compliance obligations, including the keeping of proper accounting records, and timely payment of tax.
Currency of the Exchange
To increase the use of the local currency, all stock quotations on the CSX must be in Khmer Riel (KHR) only.
SECC will help alleviate some of this risk at the outset by allowing dollar settlements by negotiation for the first
three (3) years.
Securities Firms
The SECC granted licenses to six underwriters and various market participants.
INVESTING IN CAMBODIA 2022 | 07
Key Requirements for listing on the CSX
A Listing Entity, which intends to transfer from Growth Board to Main Board, shall meet the listing criteria of its
intended transferring market and submit the application to the Cambodian Stock Exchange.
Main board Growth board
• KHR30 billion (US$7.5 million) Shareholders' equity • KHR2 billion (US$500,000)
• KHR2 billion (US$500,000) for • Positive net income for latest
the latest year; and year; or
• Cumulative KHR3 billion Net Profit • Positive operating cash flow
(US$750,000) for the latest & gross profit margin 10%
two (2) years
• 200 shareholders; and • 100 shareholders; and
• 7% of the total voting shares Shareholder • 10% of the total voting
shares
• Two (2) years Audited Financial • One (1) year
Statements
• KHR4,000,000 (US$1,000) Listing Eligibility Review • KHR2,000,000 (US$500)
Fee
• 0.010% - 0.030% of total • KHR4,000,000 or 0.025%
market capitalisation of the total market cap,
• Minimum KHR10,000,000 Listing Fee whichever is larger
(US$2,500)
• 0.005% - 0.020% of total • KHR4,000,000 or 0.015% of
market capitalization the total market capitalization,
Annual Listing Fee
• Minimum KHR3,000,000 whichever is larger
(US$750)
• Board members: At least 5 • Board members: At least 5
• Independent director: > 1/5 of • Independent director: >= 1/5
total number of directors of total number of directors
• If foreign independent Corporate Governance • If foreign independent
director: >= 6 months of director: >= 6 months of
working experiences in working experiences in
Cambodia Cambodia
• Audit Committee • Audit Committee
• Risk Management • Risk Management
Committee: Committee: Assets >
Assets >= KHR200 billion KHR200 billion (US$50
(US$50 million) million)
• Nomination Committee: BOD Committees • Nomination Committee:
Board consider to establish • Board can consider to
and other Committees as establish it and other
necessary and as required Committees as necessary
by SECC
08 | INVESTING IN CAMBODIA 2022
Setting up a business in Cambodia
Commonly used business entities 3. Representative Office (RO)
Registering a business may involve a series of minis- A RO is prohibited from undertaking profit-making activi-
tries/institutions. Ministry of Commerce (MoC), General ties including buying or selling of goods or services and
Department of Taxation (GDT) and Ministry of Labor and construction. A RO uses the name of its principal e.g.
Vocational Training (MLVT) are the three main relevant "Representative Office of XYZ Co.Ltd.".
ministries/institutions which are required to go through Requirements for foreign investors
to get your business registered. In general, businesses
operate in Cambodia via the following vehicles: For a foreign company, the full name, address, nationality
of the foreign investor and the number of shares held in
— A company or subsidiary incorporated in Cambodia the company are required to be disclosed to the MoC.
— A branch of a company incorporated outside Cambodia For a Branch, the place of registration of the foreign
— A representative office of a company incorporated company, details of its structure and other information
outside Cambodia in the prescribed documents need to be disclosed to
New IT business registration platform the MoC.
The new IT business registration platform allows the For a RO, the requirements are the same as for a Branch.
investor to register its business at MoC, GDT and MLVT If the company or branch needs to apply for a particular
in one go by using this new online business registra- license to carry out its business operations, additional
tion platform which takes up to only 8 working days information from the foreign investor may have to be
until obtaining digital licenses or certificates. Payment of provided to the relevant government authority.
registration fees can be made via the electronic banking Qualified Investment Projects (QIPs)
system. A payment receipt is issued by an automated
system as evidence of payment. A QIP may be eligible for investment guarantees and
investment incentives as provided under the Law of
Note that if your business is required to register at minis- Investment. Both foreign and domestic investors may
tries/institutions other than MoC, GDT and MLVT, you apply for QIP status by registering their projects with the
may need to follow the procedure of the relevant minis- Council for Development of Cambodia (CDC), providing
tries/institutions. their industry does not feature on the “negative list” and
Main legal formalities for the new establishment they fulfill certain investment capital requirements. Note
and registration that the entity eligible for QIP status is primarily limited
1. Company to a Limited Liability Company (LLC).
The Law on Commercial Enterprise is silent on minimum
capital requirements. However, if the Memorandum and
Articles of Association fails to state the number and price
of the shares, the company must issue a minimum of
one thousand (1,000) shares with a par value of not less
than four thousand (4,000) KHR per share. Note that for Many businesses require a license or
certain licensed activities, there are minimum capital
requirements. Generally, there is no restriction on foreign
permit to operate, including areas such
ownership, except for land holding. The name of the as banking and financial institutions,
company must first be approved by the MoC. tour agencies, real estate agencies,
A memorandum and articles of association has to be telecommunication operators, industrial
prepared for the company and lodged with the MoC, factories, etc.
together with the prescribed information for incorpora-
tion.
2. Branch
Dary So
For branch registration, relevant documents and informa- Partner,
tion of the parent company and the branch are required Tax & Corporate Services
to be provided to the MoC. The Branch uses the name
of its principal e.g. "Branch of XYZ Co.Ltd.".
A Branch office can carry out trading activities such as
sales and purchase of goods and services.
INVESTING IN CAMBODIA 2022 | 09
Accounting and reporting requirements
Audit requirements
Financial statements Not-For-Profit Entities Book year • Annual turnover above
The Cambodian (CFRS for NFPEs) Generally, the tax KHR4,000,000,000 (approxi-
on 21 January 2019. mately US$1,000,000)
Accounting and Auditing and accounting
Re g u l a t o r (CAAR), Nevertheless, an updated year is the calen- • Total assets above
Accounting Framework KHR3,000,000,000 (approxi-
(formally the National dar year. The tax mately US$750,000)
Accounting Council (NAC) to govern such entities is and accounting
expected to be released by • Average employee number of
of Cambodia has adopted year-end does not above 100
International Financial the CAAR in the near future. need to coincide
Reporting Standards Law on Accounting & with the calendar • *Meet 2 out of 3 criteria
(IFRS) for Small and Auditing year, although any
Medium-sized Entities The Law on Accounting change must be do not comply with the
(SMEs) and IFRS issued and Auditing sets forth approved. various requirements of
by the International certain accounting require- Audit requirements the Law on Accounting
Accounting Standard ments which includes, but and Auditing. Under the
Board (IASB) effective for All enterprises and NGOs sub-decree, first offences
is not limited to the follow- that meet the criteria set
Financial Statements with ing: are penalized with finan-
the period beginning on or out in Prakas No. 563SHV cial penalties, repeat
after 1 January 2010 and — Enterprises and of the Ministry of Economy offenders are subject to
1 January 2012, respec- not-for-profit organiza- and Finance must submit increasingly large finan-
tively. The standards are tions are required to their annual financial state- cial penalties and eventu-
referred to as Cambodian prepare financial state- ments to be audited by an ally the suspension of
International Financial ments within three (3) independent auditor (see the enterprise’s business
Reporting Standards months following the the illustrations below). license.
for Small and Medium- year-end. The audit must be carried
out by an auditor regis- Note that fo l l ow-
sized Entities (CIFRS for — Financial statements ing requests from the
SMEs) and Cambodian form the basis for tered with the Kampuchea
Institute of Certified Public Cambodian business
International Financial fulfilling tax obliga- community to allow
Reporting Standards tions. Accountants and Auditors
(KICPAA). Enterprises more time
(CIFRS). With the excep- — Accounting records to ensure compliance
tion of non-profit organiza- must be maintained For Qualified Investment with the laws, the
tions, public accountability and the underlying Projects (QIPs) registered Ministry of Economy and
entities and specialized transactions must be with the Council for the Finance has subsequently
banks are required supported by proper Development of Cambodia issued Circular No. 007
to adopt CIFRS while documentation. (CDC) in accordance with MEF which delays the
non-public accountabil- the Law on Investment, implementation of the
ity entities that meet the — Accounting records there is an obligation to
and financial state- sub-decree on penalties
audit requirements below submit their annual finan- for violations of the Law on
are required to adopt ments should be in cial statements to be
Khmer language and Accounting and Auditing
CIFRS for SMEs or opt to audited by an independ- until the 11 September
use CIFRS, if preferred. Khmer Riel, and a ent auditor registered
second set of account- 2021.
Non-profit organizations with KICPAA irrespective
established in compli- ing records and finan- of whether they meet the
ance with the Law on cial statements may criteria outlined in Prakas
Associations and NGOs be prepared in a No. 563SHV or not.
are required to prepare foreign currency and in
English language if the Penalties for non-compli-
financial statements and ance
a report of operating activi- entity carries out its
activities with foreign Sub-Decree No. 79 ANKr.
ties but are permitted to BK issued on June 1
follow an accounting entities.
2020 sets out a series of
framework of their choice, — Enterprises and penalties for violations of
following the issuance of not-for-profit organiza- the Law on Accounting
Notification No. 30 from tions are obligated to and Auditing . This
the NAC to postpone maintain their account- Sub-Decree provides the
the implementation of ing records for a period CAAR with the power to
the Cambodian Financial of ten (10) years. penalize enterprises that
Reporting Standards for
10 | INVESTING IN CAMBODIA 2022Total expenses of above KHR2,000,000,000
(approximately US$500,000)
Average employee number of above 20
Audit requirements—NGOs
• Should meet all criteria
• If not, financial statements submission on a volun-
tary basis
Prakas 563SHV dated 10 July 2020 on the Obligations to get
Financial Statements audited by an Independent Auditor
Annual turnover above KHR4,000,000,000
(approximately US$1,000,000)
Total assets above KHR3,000,000,000
(approximately US$750,000)
Average employee number of above 100
Audit requirements—Commercial Entities
• Meet 2 out of 3 criteria
Prakas 563SHV dated 10 July 2020 on the Obligations to get
Financial Statements audited by an Independent Auditor
INVESTING IN CAMBODIA 2022 | 1112 | INVESTING IN CAMBODIA 2022
Other compliance
requirements
National Social Security Fund (NSSF)
All entities with at least one (1) employee are required to register with
the NSSF, file monthly reports, and make monthly contributions to the
NSSF for two social security schemes: the "occupational risk scheme" and
"healthcare scheme". The payment of monthly contributions to the NSSF
must be performed by the 15th of the following month and the employee
report must be reported to the NSSF by the 20th of the following month.
Certificate of Compliance (CoC)
Annually, all QIPs are required to obtain a CoC from the CDC in order to
receive the investment incentives granted under the investment license.
The CoC is intended to provide confirmation that the QIP has complied
with relevant tax and investment regulations.
Annual Declaration of Commercial Enterprise
(ADCE)
All entities registered with the MoC are required to prepare and file the
ADCE with the MoC once a year. The filing must be done within three (3)
months from the due date as notified by an email from the MoC.
Labor Law Compliance
Enterprises with at least one (1) employee are required to register
with the Ministry of Labor and Vocational Training (MLVT). After the
initial registration, enterprises are required to notify the labor office on
an ongoing basis of any relevant changes, such as staff movements.
Enterprises wishing to employ foreign workers must apply for a foreign
manpower quota annually, and for work permits for foreign staff.
Other obligations for employers may include registration of internal
work rules and fulfilling trade union and staff representative election
requirements.
INVESTING IN CAMBODIA 2022 | 13Cambodia tax guide
The principal taxation law of Cambodia is the Law on Taxation (LoT) adopted by
Taxpayers will be required
to submit and pay taxes to
the General Department of
Taxation (GDT) on an annual
the National Assembly in January 1997, amended by the Law on Amendment
on the LoT (LALoT) signed into law March 2003. The LoT is further defined by
and monthly basis.
the Prakas (a regulation) issued by the Ministry of Economy and Finance which
clarifies certain tax provisions stipulated in the LoT. Prakas no. 098, dated 29
January 2020 is the recently issued ToI regulation which abrogates previously Mona Tan
issued ToP Prakas no. 1059 dated 12 December 2003. Partner,
Tax & Corporate
Overview Services
Taxpayers under the self-assessment regime (SAR) are categorized into
three classes of taxpayers:
Classification criteria
Taxpayers
Business Sector Annual Turnover
Agriculture, Service, Commercial KHR250M – KHR1,000M (approx. US$62.5K – US$250K)
Small
Industrial KHR250M – KHR1,600M (approx. US$62.5K – US$400K)
Agriculture KHR1,000M – KHR4,000M (approx. US$250K – US$1,000K)
Medium1 Service and Commercial KHR1,000M – KHR6,000M (approx. US$250K – US$1,500K)
Industrial KHR1,600M – KHR8,000M (approx. US$400K – US$2,000K)
Agriculture >KHR4,000M (approx. US$1,000K)
Large2 (Type 1) Service and Commercial >KHR6,000M (approx. US$1,500K)
Industrial >KHR8,000M (approx. US$2,000K)
Large (Type 2) All sectors >KHR10,000m (approx. US$2,500K)
Small taxpayers must also follow the “simplified” tax compliance process and can file monthly tax through an
application. Medium and large taxpayers must file their taxes through the GDT’s online system.
1: Including a legal registered entity, the Representative Offices.
2: Including all Branches of foreign entity, and QIP-registered entities.
Taxation of companies
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 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 a Cambodian resident for tax purposes if it is found to have a
Permanent Establishment (PE) in Cambodia (see page 29 for PE definition).
A resident taxpayer is subject to Tax on Income (ToI) or Corporate Income Tax (CIT) on income derived from
both Cambodian and foreign sources, whereas, a non-resident taxpayer is subject to ToI/CIT in respect of its
Cambodian source income only.
14 | INVESTING IN CAMBODIA 2022Residence Deductions
A company is a resident in Cambodia if: Allowable Deductions
— It is organized or managed in Cambodia; or Allowable deductions include expenses incurred in the
course of carrying on a business, with certain condi-
— It has its principal place of business in Cambodia. tions/limitations based on the nature of the expense.
Taxable Income Non-deductible Expenses
Taxable income is the net income realised from all Non-deductible expenses include:
results of business activities and other non-business
activities of the physical person or legal person. — Increase in provisions
Taxable income includes capital gains, interest, rent, — Any expense on activities generally considered to
royalty, and income from financial assets or invest- be amusement, recreation, entertainment
ment assets including immovable property. — Personal expenses, except for fringe benefits
For legal persons, the taxable income shall be the which are subject to fringe benefit tax
result from adjustment of accounting results in the tax — Any loss on sale or exchange of property, directly
year in accordance with the provisions on taxation. or indirectly, between related parties
For physical persons, taxable income is the result — Penalties, additional tax and late payment interest
from total income in the tax year offset by expendi- imposed for violation of the LoT
tures and other allowances (to be determined by a — Non-deductible tax expenses
Sub-Decree).
— Donations, grants or subsidies
Rules and procedures for taxation are further deter-
mined by Prakas (regulation) by the Minister of — Extravagant and / or unrelated business expenses
Economy and Finance. — Unpaid salaries and related party expenses,
Capital Gains subject to the deductibility rules and compliance
with the “180-day rule” payment
Capital gains realized by resident legal entities shall be period as per recent ToI Prakas no. 098
treated as income, subject to tax at the prevailing ToI
rate. Losses
Dividends Tax losses can be carried forward for generally a
maximum of five (5) years (except for tax loss of petro-
A dividend is defined as a distribution of property or leum and mineral resource operation which is covered
money, made by a legal person to a shareholder with by separate rules). Losses cannot be carried back. Tax
the exception of distribution of capital or equity inter- losses may be forfeited depending on certain criteria
est in a complete liquidation of the Company. (e.g., change in business activity or if the taxpayer is
Dividends received from non-resident companies are subject to a unilateral tax reassessment).
subject to income tax in Cambodia. A credit is allowed Grouping/Consolidation
for tax paid overseas on foreign source income,
subject to certain conditions. There are no grouping or consolidation provisions in
Cambodia.
Tax Depreciation/Capital Allowances
Exempt Income Depreciation is deductible in accordance with speci-
Dividends received from resident companies are fied rates if the assets are used in the course of carry-
not subject to income tax. ing on a business. Depreciable assets are divided into
the following classes/categories, and are depreciated
at the following rates:
INVESTING IN CAMBODIA 2022 | 15Class Depreciation Method
Straight line based on useful life or 10% straight-line if no specific useful life.
Intangible Assets
Purchased goodwill (i.e., forming part of the intangible asset) is allowed to be amortized.
Natural Resource Depletion shall be allowed as deduction in reference to the total production during the year and the
estimated total production from the natural resource
For rubber crops, depreciation rate shall be allowed for a period of 20 years with a depreciation rate
of 3% to 5%, depending on the turnover year.
Agricultural Assets (e.g., rubber
Non-rubber agricultural crops shall be depreciated on a straight-line basis based on the expected life
plantation, other agricultural
of production or 5% per year, whichever is shorter
crops, animal husbandry)
Animal husbandry shall be depreciated on a straight-line basis based on the expected life of
production or 5% per year, whichever is shorter
10% straight line depreciation shall apply for "non-concrete" assets
Class 1 Buildings & Structures
5% straight line depreciation shall apply for “non-concrete assets”
Class 2: Computers, electronic
information systems, software, 50% diminishing value
and data handling equipment
Class 3: Automobiles, trucks,
25% diminishing value
office furniture and equipment
Class 4: All other tangible
20% diminishing value
property
Tax depreciation (i.e., full year) shall amount equal to the total inter- Tax Rates
commence in the tax year when the est income plus 50% of “net The Cambodian Tax Law provides
asset was put into service, or in the non-interest income” earned the following corporate income tax
commencement year of production. for the year. Net non-interest or annual ToI rates:
No tax depreciation shall be claimed income is the gross income,
in the year of disposal. other than interest income, less — 20% on taxable income realized
allowable non-interest expenses. by a legal person.
Fixed assets in classes 2 to 4 are
accounted for on a pooled basis, — Interest expenses, which is not — 30% on taxable income realized
and therefore capital gains or losses allowed for deductions in the in oil or natural gas roduction
on the disposal of fixed assets are current tax year, can be carried sharing contract or realized
not calculated individually but are forward as interest expense from the exploitation of natural
calculated based on the result of for subsequent tax years in the resources including timber,
the pooled asset account. same limitation until the 5th tax mineral, gold and precious
year in the order of the year the stones. Tax on Excess Income
Charitable contribution (ToEI) shall also apply.
interest was incurred.
The deductibility of charitable contri- — 5% on taxable income on insur-
bution expense is limited to 5% of — Interest expense to related parties
shall be allowed as a tax deduc- ance or reinsurance activities on
the taxable income after tax adjust- property risk
ments and before deduction of chari- tion (i.e., applying the “180-day”
table contribution itself. rule). This is still subject to the — 0% on taxable income of the QIP
interest expense limitation rule during the tax exemption period.
Unutilized charitable contribution as mentioned above.
expense cannot be carried forward Tax on Petroleum and Mineral
as a deduction against taxable — Interest rate between related Resources Operations
income in future years. parties must comply with the Taxpayers conducting Petroleum and
requirements under the TP Mineral Resources operations shall
Interest Expense regulations on “arms-length” be subject to:
There is no specific thin capitalization principle, and the keeping of
legislation in Cambodia; however, proper TP documentation. * Annual ToI rate of 30% on taxable
limitation on interest expense income during a tax year;
Petroleum and mineral resource
deduction is provided under the ToI operations shall be subject to * Tax on Excess Income (ToEI) at
regulation, as follows: different rules on interest expense a progressive tax rate by tranche
— The deduction for interest deduction. based on:-
expense shall be limited to an
1: Tax year is calendar year, but an enterprise can apply for a tax year other than calendar year, for example, to be consistent with its parent company/ if the foreign parent company owns
more than 51% equity shares.
2: The minimum tax shall be imposed on taxpayer who maintain "improper" accounting records (i.e. effective from the tax year 2017 onwards). Under the LoFM 2018, petroleum and
mineral resource operations are not subject to minimum tax.
16 | INVESTING IN CAMBODIA 2022Tranche Excess profit ratio Rate
To get recognition as sales agents, Payments of PToI are due by the
enterprises must fulfill certain condi- 25th day of the following month
1 up to 1.3 0% tions such as being medium or large through the E-Filing system.
2 Above 1.3 to 1.6 10% taxpayers, having contracts with the The total monthly PToI paid during
principals, no change of ownership the year shall be claimed as tax
3 Above 1.6 to 2 20%
of the goods, maintain invoices credits against the annual ToI or MT
4 Above 2 30% compliance, and keeping inventory payable, whichever is higher, at year-
of the goods. A sales agent can end. The remaining tax payable must
Specific rules on depreciation, apply and receive an agent certifi-
deduction, and transfer of interest be paid within 3 months following
cate from the GDT which is valid for the tax year (i.e., the same deadline
shall apply, as follows: 2 years. Without proper recognition for the lodgement of the annual ToI
— Transfers (in part or in full) of inter- and certificate, the sales agents return). Excess tax payments may
est in rights or share in a mineral would be liable to all kinds of the be carried forward to the succeeding
resource agreement shall be principal taxes relating to sales on taxable periods.
treated as a taxable transaction behalf of the principals as if these
subject to the applicable tax sales were their own income. Meanwhile, a 1% Minimum Tax (MT)
shall be computed based on the
— Loss carried forward is allowed Tax Administration gross annual turnover (i.e., unless
until the tenth (10) year for Tax Identification Number (TIN) the taxpayer is exempted from the
petroleum operations and Business entities are required to 1% MT, based on certain condi-
the fifth (5) year for mineral register with the tax administration tions). The taxpayer shall be liable
resource operations within fifteen (15) working days, from for the annual ToI or MT, whichever
— Losses incurred in a contract the commencement of economic is higher.
area cannot be carried forward activities, or after receiving the Tax Credits
and/or offset as a deduction in registration approval certificate or
another contract area approval letter from the relevant The following tax credits may be
ministries or institutions. claimed as a deduction against the
— Deduction for interest expense is ToI payable at year-end:
subject to a debt to equity ratio For QIP-registered enterprise,
of 3:1 separate TIN should be maintained — Monthly PToI paid during the
per activity (e.g., QIP and non-QIP taxable year
— Deductible provision for decom-
missioning cost reserve based activities). — Excess tax payments from the
on an approved decommission- Tax Returns previous taxable period
ing plan. If the actual decommis- The annual tax return must be filed — Advance Tax on Dividend
sioning cost is higher than the within 3 months following the tax year. Distribution (ATDD) payments
decommissioning plan claimed as The tax year is generally a calendar (see below related discussion
deduction, the difference shall be year, unless the taxpayer obtains on ATDD)
treated as a deductible expense, specific approval to use a different — WHT credits withheld by payors,
otherwise, the difference shall be taxable period other than the calen- which must be properly substan-
treated as a taxable income dar year. The return must be filed tiated
— Specific depreciation rules are irrespective of whether the company — Foreign tax credits on tax paid
set on depreciating prospect- is making a profit or loss. The GDT overseas on foreign source
ing, exploration, and develop- recently required taxpayers to submit income, provided the same
ment costs the ToI via the GDT’s online tax return is properly substantiated, and
Sales agents supplying goods management system, i.e. E-filing. subject to the certain limitations
on behalf of principals Meanwhile, monthly tax returns — Special tax credits granted to
Recognised agents (i.e. travel are due for filing by the 25th day of specific industries and/or activi-
agents, sales depots), supplying the following month via the GDT’s ties as provided by the govern-
goods or services on behalf of E-Filing system. ment under specific regulations
the principals, are not required to Payment of Tax Record Keeping
declare and pay taxes on the sales A company is subject to a monthly
on behalf of the principal. They are Taxpayers are required to keep books
prepayment of ToI (PToI) during the of accounts, accounting records and
only obligated to collect those taxes year, which is self-assessed at 1%
on behalf of the principals and pay other relevant documents for a period
on monthly turnover (i.e., unless of 10 years, after the end of the tax
PToI and ToI on commissions earned the taxpayer is exempted from the
from the principals. year. The taxpayer must maintain
PToI based on certain conditions).
3: Suspensions: 1% PToI is suspended for enterprises in the agricultural sector, both for domestic supply and for export such as: planting, producing and supplying certain agricultural
products for 5 years starting from January 2019 and the garment industry such as textile, garment, footwear, handbag and hat for the purpose of export until the end of 2022.
INVESTING IN CAMBODIA 2022 | 17accounting records in accordance with the accounting standards in effect in the Kingdom of Cambodia. For QIP-registered
enterprise, separate books of accounts should be maintained per activity (e.g., QIP and non-QIP activities).
Taxpayers are also required to maintain accounting records in Khmer language and Khmer Riel. Failure to comply with
the above requirements may result in a unilateral tax assessment being issued by the GDT.
Land area Population Capital City Trade Balance Minimum Wages
Approximately 2021e Approximately Imports (2021e) 2022
181,035 16.9 Million Phnom Penh US$25.3 Billion US$194/month
Km2 2022f Provinces & cities Exports (2021f)
17.2 Million 25 US$19.5 Billion
GDP Growth % GDP GDP/capita Exchange rate Inflation
2020 2020e 2020 US$ to KHR 2021e
2021 avg.
0.2% US$27.5 Billion US$1,512 2.5%
2021e 2021f 4,070
3.6% US$29 Billion
Source: PopulationPyramid.net Population of Cambodia 2021
18 | INVESTING IN CAMBODIA 2022Taxation of individuals
Introduction
As of date, Cambodia has yet to implement a personal income tax regime and there is no requirement to submit
a personal income tax return to the GDT. Currently, tax on income earned by individuals from their employment
activities are withheld by the employer and remitted to the GDT through the monthly filing of the Tax on Salary
(ToS) and Fringe Benefits Tax (FBT). Salary is taxed according to progressive tax rates ranging from 5% to 20%,
while fringe benefits are subject to a flat rate of 20% based on the fair market value (FMV) of the benefit.
Individual residents of Cambodia are subject to income tax on their 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 (subject to certain limitations), provided the same is properly substantiated.
Resident/Non-Resident not excessive, and they can be provided to every employee
A person is a resident of Cambodia substantiated; regardless of position or function,
if the person is “domiciled in” or — Indemnity for layoff within the — Baby care allowance or baby
has a “principal place of abode” in limit as stated in the Labor Law; nursery expense (in accordance
Cambodia, or the person is present with Labour Law)
in Cambodia for more than 182 days — Additional remuneration received
in the current tax year. with social characteristics as Companies and enterprises are
provided in the Labor Law; required to submit an allowance
A non-resident means any person policy for the above allowances to
who does not fall under either of the — Supply of free or subsidized
uniforms or special professional the GDT to be eligible for the above
above stated criteria. tax reliefs.
equipment used in the course of
Employment Income/Employee employment; and
Individuals receiving remunera- Deductions
— Flat allowances for mission and
tion in the course of employ- Employees are not allowed
travel received in the course of
ment are subject to tax on salary. any deductions against their
employment.
Remuneration includes salary, salary income as employees
wage, bonus, overtime and other — Employees under the are not required to submit
compensation. A fringe benefit Undermined Duration Contract annual tax returns.
tax on employer-provided cars, (UDC) are entitled to annual
housing, low-interest loans, and seniority indemnity payable
free, subsidized or discounted twice per year. This payment Tax Administration
goods and services is levied on shall be exempted from Returns and Assessments
employers based on the FMV of ToS for an amount up to The filing and payment of ToS and
the fringe benefits. The tax rate KHR4,000,000 (~$1,000). FBT to the GDT is due by the 25th day
is currently 20% and it is payable The following allowances may be of the following month via the GDT’s
monthly. The actual cost of provid- exempted from either ToS or FBT: E-Filing system. The monthly ToS and
ing the benefit will normally be — Commuting expenses (between FBT declaration is considered to be
deductible for the employer itself home & workplace), accommo- a final tax for individuals as there is
except for the fringe benefit tax dation allowances, and accom- no requirement to submit separate
itself. modation provided within the personal income tax declaration.
Exempt Income Company’s premise (all in Personal Allowances and
Employment-related payments accordance with Labor Law), Rebates of Tax
received by a tax resident that are — Meal allowances were provided The following relief is provided to a
not subject to income tax include: to all worker-employees regard- resident employee:
— Reimbursement of business less of position/function,
Relief for the month KHR
expenses by the employer, — Social security or welfare fund
provided that the costs are (within the limit of the law), Child relief for each child (14 years old 150,000
or 25 years old if still at school)
incurred in the course of — Health insurance or life/health
employment, the amounts are insurance premium where
Dependent spouse (must be housewife) 150,000
* employees under the Undermined Duration Contract (UDC) are entitled to annual seniority indemnity payable twice per year. This payment shall be exempted from ToS calculation for
an amount up to KHR4,000,000 (~$1,000).
INVESTING IN CAMBODIA 2022 | 19Tax Rates
Residents
The ToS rates are as follows:
Taxable Income for the Month Progressive
(KHR) Tax
From 0 - 1,300,000 0%
From 1,300,001 - 2,000,000 5%
From 2,000,001 - 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 a flat
rate of 20%.
Indirect and other taxes
Value Added Tax (VAT) or operations in Cambodia (i.e., the all goods imported into Cambodia
VAT is chargeable on a wide range burden of proof is on the taxpayers). based on the value of the imported
of goods and services supplied in Documents such as contracts, bank goods, including any customs duty,
Cambodia and on the importation statements, invoices, etc., must also insurance, and freight charges.
of goods. The basic principle of VAT be maintained for the GDT’s review. Certain importation of goods may
is to charge tax at each stage of Imported services not be subject to import VAT (e.g.,
production, allowing each supplier VAT state-charge importation, impor-
For business to business (B2B) tation of non-commercial goods).
credit for the tax paid, so that the E-commerce transactions, the VAT
VAT eventually impacts the final on the transaction shall be accounted Exempt Supplies
consumer. for via the “reverse charge” mecha- The following are considered exempt
Taxable supplies attract VAT at nism. Under the “reverse charge” supplies, not subject to VAT:
either the standard rate of 10% or mechanism, the resident taxpayer — Public postal service;
the zero rate. Subject to compliance receiving the supply from the
with certain conditions, the zero rate non-resident taxpayer shall account — Hospital, clinic, medical, and
applies to the export of goods and and pay for the output VAT on such dental services and sales of
services, certain charges in relation supply on behalf of the non-resident medical and dental goods
to international transport of people taxpayer. Correspondingly, input VAT incidental to the performance
and goods, supply of goods and shall be allowed as tax credits based of such services;
services by supporting industries on the current tax regulations in — Passenger transportation
QIP/contractors to particular export effect (Articles 6 & 7 of Sub Decree services by a wholly state-
industries. no. 65). owned public transportation
Exported services As of date, it seems that the “reverse system;
To qualify as an exported service (i.e., charge” mechanism on imported — Insurance services;
subject to 0% VAT), it is not suffi- services only applies to E-commerce — Primary financial services;
cient to prove that the supply is billed transactions as provided under
Sub-Decree no. 65. — Importation of articles for
to a non-resident person, but to also personal use that are exempt
prove that the services (or portion Imported goods from customs duties;
thereof), does not relate to, were not 10% VAT shall generally apply to
consumed, or benefits any business — Non-profit activities for public
1: Notable exemptions:
— Any payment to a registered self-assessment regime taxpayer for service, rental or a certain kind of software (shrink-wrap software, site license, down-loadable software, and
software bundled with computer hardware) are exempted from WHT, provided it is supported by a proper tax invoice.
— Any payment of service of less than KHR50,000 (~US$12.50) are exempted from the 15% WHT on service.
20 | INVESTING IN CAMBODIA 2022interest that have been recog- exchange of goods or services, the implementation of the online
nized by the Ministry of Economy including commercial activity online. VAT refund system speeds up the
and Finance (MoEF); The Sub Decree provides a detailed process, especially for taxpayers
— Educational services; list of E-commerce transactions with “Gold Status” certificate of tax
covered by this Sub Decree which compliance.
— Supply of unprocessed agricul-
tural products; includes, but is not limited to, Specific Tax on Certain
the supply of software and other Merchandises and Services
— Supply of electricity; and services related thereto, online (STCMS)
— Supply of water for public use; shopping or auctions, advertising, Certain goods and services are
and solid-liquid trash collection website hosting, data retrieval, subject to STCMS, which is a form
or cleaning service consumption of digital products and/ of excise tax that applies to impor-
VAT State-charge or contents via download, real-time tation or domestic production and
streaming, subscription, or other supply of certain goods and services.
VAT on certain supply and import means.
of certain agricultural products shall Examples of the levy of STCMS are:
be borne by the State (i.e., State This VAT Sub-Decree introduced the
Charges). Domestic supplies of applicability of the “reverse charge” Item Rate
certain basic foodstuffs such as mechanism for B2B E-commerce Domestic and international telephone
meat, eggs, fish, spice, sauces, etc. transactions on imported services services
3%
shall be considered as VAT State- as mentioned above. Meanwhile, for Domestic and international air ticket
10%
charge transactions as per relevant B2C E-commerce transactions, the
Prakas. non-resident taxpayer shall declare Entertainment services
10%
and pay for the VAT on the transac-
VAT Registration tion to the GDT. Cigarettes
20%
Taxpayers in Cambodia who are Subsequently, the (MoEF) has Beers
registered under the self-assess- issued further Prakas 542 dated 8
30%
ment regime shall be assigned a VAT September 2021 and Instruction Wine
35%
registration number. Generally, such 20522 dated 8 December 2021
VAT number shall be used by the to clarify on the invoicing issue,
said taxpayer in its tax compliance Simplified Registration procedure, For domestically produced goods,
obligations in Cambodia (including the timeline of the registration, the the basis for STCMS’s calculation is
direct and indirect). de-registration and monthly decla- 90% of the selling price disclosed
Sub Decree no. 65 was issued on ration obligation. on the invoice exclusive of VAT and
8 April 2021 implementing certain STCMS.
As per Notification no. 776, dated
provisions covering the supply of 17 January 2022, the GDT further The filing and payment of STCMS
goods and services traded through delayed the implementation of the to the GDT is due by the 25th day
the “Electronic Commerce” VAT on E-commerce regulation of the following month through the
(E-commerce) in Cambodia. Under until 31 March 2022 to give E-Filing system.
this Sub-Decree, non-resident taxpayers enough time to prepare Tax for Public Lighting (TPL)
taxpayers conducting E-commerce and implement these new rules
transactions, with no permanent TPL is a tax levied on the sales of
starting from 1 April 2022 onward. alcohol and cigarette products, both
establishment (PE) in Cambodia, However, impacted taxpayers
shall be required to register with the imported and domestically manufac-
must complete their simplified VAT tured, at each stage of supply.
GDT. This registration requirement is registration prior to 1 April 2022.
for VAT purposes only (Article 4 of The basis for TPL calculation* is as
Sub Decree no. 65). VAT Refund follows:
VAT on E-commerce transactions VAT filing and payment to the GDT — For importer or manufacturer, the
are due by the 25th day of the tax rate is 3% of the value of
As defined under this Sub Decree, following month thru the E-filing
“digital goods” refers to intangi- taxable product exclusive of VAT
system. Monthly VAT declaration, and TPL itself.
ble goods purchased, supplied, as well as VAT refund can be initi-
and sent entirely online, while ated online via the GDT’s E-filing — For reseller and/or distributor, the
“digital service” refers to services system. In practice, a VAT refund tax rate is also 3%, but the basis
performed online. “E-commerce” is a time-consuming process as is now only 20% of the amount
refers to the purchase, sale, rental, the GDT needs to conduct an audit recorded on invoice, exclusive of
to ascertain the veracity of the VAT and TPL itself.
claim. Recently, it is observed that The filing and payment of TPL to the
1: Notable exemptions:
— Any payment to a registered self-assessment regime taxpayer for service, rental or a certain kind of software (shrink-wrap software, site license, down-loadable software, and
software bundled with computer hardware) are exempted from WHT, provided it is supported by a proper tax invoice.
— Any payment of service of less than KHR50,000 (~US$12.50) are exempted from the 15% WHT on service.
INVESTING
SEIZEIN
THE
CAMBODIA 2022 || 21
OPPORTUNITYGDT is due by the 25th day of the Payment Rate
transaction shall not anymore be
following month through the E-Filing subject to the 14% WHT.
system. Interest 14%
The following transaction generally
* the revised calculation for reseller and/ Dividend and “deemed dividends” based
14%
triggers issue on “deemed dividend”
or distributor was effective 9 October 2017 on certain transactions;
onward based on the proportionate share of
Capital gains derived in Cambodia 14% the RE balance:
Accommodation Tax (AT)
Management or technical services 14%
— Reduction of capital or equity
AT is a tax on the provision of accom- interest, including repatriation
modation services. AT is levied at Income from services performed in
14% of profits directly through the
Cambodia;
the rate of 2% on accommodation capital account and/or capital
services fees, inclusive of other Royalties from the use, or right to use reserves
14%
services charges and all kinds of intangible property
taxes but exclusive of the AT itself — Sale or transfer of shares owned
Other various Cambodian source
and VAT. The filing and payment of income(s) as provided in the Article 33 by non-residents to another
14%
AT to the GDT is due by on the 25th
(new) of 2003 Law on Amendment on the
Law on Investment (LALoT)
person
day of the following month through Advance Tax on Dividend
the E-Filing system The above-mentioned rates shall Distribution (ATDD)2
OTHER TAXES be reduced depending on the provi- ATDD is imposed on an enterprise,
sions of the relevant DTA, subject to except for QIP, which distributes
Withholding Taxes (WHT) compliance with certain conditions.
Resident withholding tax dividends from income before paying
Please refer to section 5 below for the annual ToI to its shareholders,
A resident taxpayer is required to the DTA signatory countries. local or foreign. The ATDD payable
withhold tax from the following The liability for WHT rests with shall be equal to the amount of
payments of Cambodian source the withholding agent (i.e., the dividend grossed up by the applicable
income to a resident entity: Cambodian payor). The GDT has no ToI rate and multiply by that rate. The
recourse to recover withholding tax ATDD can be a credit against annual
Payment 1 Rate from the recipient of the income ToI for the tax year it takes place and
Payment for services to a physical person, payment. The WHT is payable at any excess can be carried forward to
including management, consulting, and
other similar services
15% either the date the payment is the following year.
made, or the date the expense is Patent Tax
Payment of royalties for intangible assets
15% recorded in the books, whichever
and interests in minerals, oil or natural gas
comes first. Patent tax is a yearly business regis-
Interest payments made to a physical tration tax which all enterprises
person or an enterprise, except for interest The filing and payment of WHT to carrying on business activities in
15%
paid to a domestic bank or savings
institution
the GDT is due by the 25th day of the Cambodia are required to pay by 31st
following month through the E-Filing March. A “patent tax certificate” will
Income from the rental of movable or
immovable properties
10% system. be issued by the GDT upon regis-
“Deemed dividends” tration and/or after each successive
Interest payments on a fixed deposit
made by a domestic bank or savings 6% 14% WHT shall apply on dividends change or update with the GDT of
institution to a resident taxpayer
paid to non-resident persons, both information of the enterprise that
Interest payments on savings account from actual payment of dividends affects the patent tax certificate.
made by a domestic bank or savings 4%
institution to a resident taxpayer and from “deemed dividend” trans- If the enterprise carries out different
actions. types of business, a separate patent
Non-Resident WHT The concept of deeming dividends, tax certificate is required for each
irrespective of whether there is distinct business activity. Likewise,
Any resident taxpayer carry- if a taxpayer carries out business
ing on business, including PE of actual dividend declaration, triggers
the advance payment of the 14% in different cities or provinces, a
non-resident taxpayer, who makes separate patent tax certificate is
payment from Cambodian source WHT on future dividend declaration.
The 14% WHT shall be computed required for each location.
income to a non-resident, shall
withhold and pay as a tax in an based on the portion of the retained The amount of patent tax payable
amount equal to 14% of the amount earnings (RE). Subsequently, when will be depending upon the form of
payable. Payment from Cambodian there are actual declaration/payment the business, as well as the type
source income may include the of dividends out of the RE that was of business activity and the level of
following: already subjected to 14% WHT on turnover.
“deemed dividends”, such dividend
2: The ATDD effectively replaces the previous Additional Income Tax on Dividend Distribution starting from implementation of the 2020 LoFM, signed on 20 December 2019.
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