1 Tax System and Tax Regime in Cambodia KINGDOM OF CAMBODIA Ministry of Economy and Finance General Department of Taxation Prepared by: 1- Mr. Tech Sokun Thearith, Litigation Office 2- Mr. Chuor Se, Legal Office NATION RELIGION KING

I-Tax System II-Tax Regime Contents

3  There are 15 type of Taxes, divided into State Budget and Capital-Provincial Budget I-Tax System I. State BudgetII. Capital-Provincial Budget 1.Tax on Profit (TOP)8.Registration Tax (Tax on property transfer) 2.Tax on Salary (TOS)9.Tax on Unused Land; 3.Value Added Tax (VAT)10.Accommodation Tax 4.Excise Tax11.Public Lighting Tax 5.Turnover Tax12.Patent Tax 6.Tax on Property Rental.13.Vehicles tax 7.Stamp Tax14.Slaughter tax 15.Property Tax

4 1-Tax on Profits  Tax Rate: –20%: Legal persons; –30%: Oil and Gas and Natural Resource; –9%: Qualified Investment Project (QIP) for transitional period 5 years; –0%: QIP for exemption period. –5% of gross premiums for insurance company  Physical Persons which have annual profit: Tax Rate –From 0 to 6,000,000 Riels0% –From 6,000,001 to 15,000,000 Riels5% –From 15,000,001 to 102,000,000 Riels10% –From 102,000,001 to 150,000,000 Riels15% –Greater than 150,000,000 Riels 20%

5 1-Tax on Profits (cont)  Withholding Tax  For resident:  15% income from service (management and consulting)  10% income from rental of movable and immovable property  6% interest in come from fixed term deposit account (banking institution)  4% interest income from non-fixed term deposit account (banking institution)  For non-residents:  14% for interest, royalty, rent, dividends, compensation for management or technical services, and income connected with use of property.

6  Additional Profit Tax This tax shall not apply on the distribution of retained earning, if an enterprises has already paid profit tax at the normal rate of 20% for a legal person. Tax Rate: -20% of retained earning, if an enterprise is distributing profits which were subject to 0% profit tax rate. -11/91 of retained earning, if an enterprise is distributing profits which were subject to 9% profit tax rate. -0% of retained earning, if an enterprise is distributing profits which were subject to 20% profit rate. 1-Tax on Profits (cont)

7  Minimum Tax: 1% of the annual turnover. This tax is due irrespective of the taxpayer profit or loss position. Impose on real regime taxpayers. is a separate and distinct tax from the tax on profits. This tax may reduce the annual tax on profits.  Exemption: - Government institutions; - Religious organizations; - Charitable, scientific, literary, educational or labor organization; - Any chamber of commerce, industry, or agriculture. 1-Tax on Profits (cont)

8 2 - Salary Tax  Tax Rate: A resident physical person is liable to the monthly tax on salary and withheld by the employer: Rate From 0 Riels to 500,000 0% From 500,001 to 1,250,000 5% From 1,250,001 to 8,500,000 10% From 8,500,001 to 12,500,000 15% From 12,500,001 to upwards 20%  For non-resident physical person: 20% are withheld by the employer.  20 % of the total values of fringe benefits are withheld by the employer.

9 2- Salary Tax (cont)  Exemptions: - Diplomatic and consular, foreign representative, international organizations and agencies of technical cooperation of other governments; - Members of the Parliament and Senate; - Real refunds on professional expenses; - Indemnity for the layoff; - Additional remuneration with social characteristics; - A flat allowance for mission and travel expenses.

10 3 – VAT (Value added Tax)  Tax Rate: –Uniform rate of 10%  Taxable supply: - The supply of goods or services by a taxable person in the Kingdom of Cambodia; - The appropriation of goods for his own use by the taxable person; - The making of a gift or supply at below cost of goods or services by the taxable person; - The import of goods into the customs territory of the Kingdom of Cambodia.

11  Non Taxable Supplies: 1.Public postal service; 2.Hospital, clinic, medical, and dental services ; 3.The service of transportation of passengers by a wholly state owned public transportation system; 4.Insurance services. 5.The importation of articles for personal use that are exempt from customs duties; 6.Non profit activities in the public interest that have been recognized by the Minister of Economy and Finance.  Non taxable supplies for diplomatic missions and international organizations: - The imports of goods for/by foreign diplomatic and consular missions, international organizations and agencies of technical cooperation; - The import of goods for the personal use of the official personnel of missions and organizations. 3 – VAT (Value added Tax)

12 4 -Turnover Tax  Tax rate: 2% -Applied to any persons subject to the Estimated Regime system. -Turnover tax payable each month may be fixed in advance for period of 3,6,12 months.  Tax base: - It’s imposed tax on supply both goods and services in Cambodia.  Exemption: - The sale of agricultural products that habitual agricultural work of farmers.

Excise Tax  Tax Rate: - 20% for beer; - 10% for all types beverages, tobacco product, hotel and other entertainment services and airline tickets; - 3% for telecommunication services.  Tax Base: - 65% of invoice price excluded VAT. - A tax levied on select products both locally produced and imported.

14 6-Tax on Property Rental  Tax Rate: - 10% income from rent  Tax Base: - A tax on receipts from rents on land, building and certain equipment paid by the owner.  Exemption: - Property owners whose monthly income from rent is below CR 500,000 under the estimate regime are exempted.

15  Nature of Tax: This tax is payable in the form of stamps affixed to some documents, panos/posters (advertising), and trade marks.  Tax Rate: - Specific small amounts depending on the type of document ranging from CR 100 for school registration to CR 2,000 for investment authorizations. - The person who supplies these products is responsible for the payment of this tax to the tax administration. 7 - Stamp Tax

Registration Tax (Tax on property transfer)  Tax rate: is generally levied at 4% of the transfer value.  Tax levied on the rights transfer of immovable properties inform of sale, exchange,donated and shareholder such as land, buildings, houses, vehicles.  Exemption: for transfers of property of the State, government transfers, public utilities, and charitable organizations.

17 9- Tax on Unused Land  Tax Rate: 2% of the land value  Tax base: is evaluated by the Commission for the Evaluation of Unused Land.

Accommodation Tax  Tax Rate: 2% of the rental price  Tax Base: - Rental price per room including all taxes and service charges, except VAT.

Public Lighting Tax (PLT)  Tax Rate: - 3% of the selling value of alcoholic drinks and cigarette.

20 12 – Patent Tax  Nature of Tax: An annual registration or license fee levied on all business, industries, and services. The base is the previous year’s turnover. New businesses are taxed on the basis of a provisional estimate.  Exemption: Farmers are not subject to the tax.

21  Nature of Tax: - Annual levy on vehicles and boats  Exemption Vehicles: - Ambulance and fire truck; vehicles of the Royal Cambodia Force, military police, national police; vehicles owned by diplomatic missions and international organizations Vehicles Tax

Slaughter Tax  Nature of Tax: - Tax levied on slaughterhouses based on the value of the livestock that is slaughtered.  Exemption: - Exempted from slaughter tax are livestock slaughtered for celebrating national tradition, for research uses and killed in accident.

15- Property Tax  It is yearly tax on land, house and buildings  The tax rate is 0.1% on the Asset Value after deducting 100 million riels (=USD25,000)  The exemption –property less than 100 million riel –Agriculture land –Property owned by the Royal Government –Property owned by any organization or person in relation to nonprofit religious and charitable) –Property owned by a foreign government diplomatic or consular, and agencies of technical cooperation of other government.

24  Two Regimes: 1. Self Assessment System (Real Regime) 2. Official Assessment System (Estimated Regime) II- Tax Regimes

25 1-Self Assessment System  Criteria for Self Assessment System: - All legal persons - Enterprises that have annual taxable turnover exceed:  500 million Riel for the supplies of goods;  250 million Riel for the supplies of services; and  125 million Riel for Government’s contract value. -Other Enterprises register voluntarily;

26  Register within 15 days of starting economic activity.  VAT Registration: Within 30 days of the day on which the person becomes a taxable person.  Tax Declaration:  Profit tax: In the period of 3 months after the end of the tax year.  VAT: The 20 th day of the month following the month in which the payment is made.  Other Tax Including Prepayment: The 15 th day of the month following the month in which the payment is made. 1-Self Assessment System (Cont)

27  Determination of taxable turnover is based on the discussion between tax officers and taxpayers.  This tax level on estimated profit shall be kept constant for a period of 3 months, 6 months or 1 year.  Declaration: Every year by October 31, in the form provided by the tax administration. 2. Official Assessment System

28