The Obligation for Monthly Tax Compliance in Cambodia

Taxpayers must comply with the obligation for monthly tax compliance after completing the tax registration. This section will highlight the obligation for monthly tax compliance, which include filing and payment of Value Added Tax (VAT), Prepayment of Tax on Income (PTOI), Withholding Tax (WHT), Tax on Salary (TOS), Specific Tax (SPT), Accommodation Tax (ACT) and Public Lighting Tax (PLT)  to the Large Taxpayer Department or Tax Branch of the General Department of Taxation (GDT) by 20^th of the following month. [Note that SPT, ACT and PLT do not apply to all taxpayers in general but are only applicable for taxpayers in certain industries; for example, hotel, restaurant etc.

Below section will provide details on each type of monthly taxes.

Prepayment on Tax on Income

What is PTOI?

PTOI is an advanced Tax on Income which is calculated at the rate of 1% of on the monthly turnover/sale revenues.

Based on Prakas No. 098 on the Tax on Income, the term “turnover” is defined as income from the main and subsidiary business activities. Other income is excluded from the basis for PTOI calculation. The total PTOI paid during the year will be used to offset against the annual Tax on Income or minimum tax.

The PTOI return must be submitted to the Large Taxpayer Department or Tax Branch by 20^th of the following month. For example, a PTOI return for January 2020 and payment of PTOI payable must be submitted and made to the GDT by the 20^th of February 2020.

(Law on Taxation, Prakas No. 098 on the Tax on Income dated 29 January 2020)

Value Added Tax (VAT)/Good or Service Tax (GST)

Who is required to submit VAT return and when is the deadline?

Any taxpayer which is an entity registered for VAT with the GDT are required to submit VAT return on a monthly basis.

The deadline for filing VAT return of any month (either with zero tax payment or full tax payment) must be made by 20^th of the following month. For example, a VAT return for January 2020 and payment of VAT payable must be submitted and made to the GDT by the 20^th of February 2020.

What is the VAT rate?

VAT rate	Type of supplies
10%	Taxable supply1 provided in Cambodia
0%	Export of taxable supply outside Cambodia
Exempt from VAT	Non-taxable supply2

What is the taxable supply?

¹Taxable supply includes as follows:

• supply of goods/services by a taxable person/registered taxpayer in Cambodia
• appropriation of goods for his own use by the taxable person
• provision of gift or supply at below actual/market price by the taxable person
• import of goods into the customs territory of Cambodia.

(Article 60 of Law on Taxation)

What is non-taxable supply?

²Non-taxable supply includes as follows:

• Public postal service
• Hospital, clinic, medical, and dental services and the sale of medical and dental goods incidental to the performance of such services
• Public transportation service, wholly owned by the government
• Insurance
• Primary financial service (i.e. deposit or loan transaction, money exchange service, trading of gold not yet processed into jewelry,Initial Public Offering, securities and other financial instrument trading and relevant clearance and settlement services in Cambodia securities market, surety services)
• Import of goods for personal use, which is exempt from customs duty in accordance with customs provision.
• Non-profit activities served for public interest
• Educational service
• Electricity and water supply
• Unprocessed agricultural products
• Solid and liquid waste cleaning or collection service

(Prakas No.559 dated 25 May 2017)

What is “output VAT” and “input VAT”?

VAT charged on the supply/sale of taxable goods or service is called “output VAT”, whereas the VAT imposed on the purchase of taxable goods or service is called “input VAT”.

If output VAT is higher than input VAT = the difference is VAT payable in the month

If output VAT is less than Input VAT = the difference is VAT credit to be carried forward

(The VAT credit carried forward can be utilized for offsetting against future output VAT in subsequent month).

Who can claim input VAT credit on the taxable purchase of goods and services?

Taxable-supply provider or exporter

If your company has been properly registered with the GDT and your main business activities is providing taxable supplies or export services, you can claim input VAT credit by using it to offset your output VAT charged from customers.

Non-taxable supply provider

However, if your company has been properly registered with the GDT but your main business activities is providing non-taxable supplies, you cannot claim input VAT credit as there is no output VAT charged from your customers. This applies to financial institutions, insurance company and hospital etc.

End user/customer

If you are an individual who purchases a product or service subject to 10% VAT, you are considered as an end consumer/user. Currently there is no mechanism which allows you to claim or refund the amount of input VAT charged on the goods/service you purchased.

What is invoicing criteria for claiming input VAT imposed on the purchase of goods or services?

To be able to claim input VAT credit, you must obtain VAT invoice with valid criteria as listed below.

The VAT invoice shall contain the following information:

• Suppliers and customers’ name, address, VAT Identification Number (VAT TIN)
• Invoice number
• Invoice date
• Description, quantity, and price of goods or services
• Total price exclusive of VAT or with VAT amount must be shown in separate line.
• Taxes must be separated from the price of goods and shown on invoice (for tax invoices).
• Quality of printing ink must be good.
• The invoice must include signature and stamp of both suppliers and customers.
• The invoice must be in Khmer language or bilingual (Khmer and English).
• The total amount must be indicated in Khmer Riels.

(Prakas No.723 dated 14 August 2019)

Note that you are not allowed for a credit of input VAT paid on the purchase or import of the following products or services [unless your business activity is in that field/industry (i.e. you are an entertainment service provider, automobile seller etc.].

• Entertainment, amusement and recreation expense
• Automobiles designed for the transport of not more than 10 passengers
• Gasoline, petroleum, lubricant oil
• Mobile phone expense

(VAT Sub-Decree, Law on Taxation, Prakas No.268 dated 31 March 2000)

What can you do with excess VAT credit carried forward?

Normal registered taxpayers (company, branch office etc.) in all business industries:

The registered taxpayers, who have excess input VAT credits at least for three continuous months, can apply for VAT refund at the end of the third month or in any month thereafter. Note that this is subject to review and approval from the tax administration.

Exporters or Qualified Investment Projects (QIPs)

Exporters or QIPs can request for refund of excess input VAT credit on a monthly basis, but note that this is subject to review and approval from the tax administration.

Diplomatic Missions and International Organizations

Foreign diplomatic and consular missions, international organizations and agencies of technical cooperation of other governments may apply for a refund of VAT on goods purchased locally for the official use in their organization, but the goods shall be included in the list by the Ministry of Economy and Finance. This is also subject to review and approval from the tax administration.

(VAT Sub-Decree, Law on Taxation)

Tax on Salary (TOS)

Currently, there are two types of employment taxes: TOS and FBT which are imposed on income from employment activities such as salary and fringe benefits.

What obligation does the company/employer have?

The employer, which has been registered as a legal entity with the Ministry of Commerce and GDT, has to withhold TOS/FBT from the salary or fringe benefits paid to employees, remit TOS/FBT payable and file TOS returns to the tax administration on behalf of the employee by 20^th of the month.

What is the difference between TOS and FBT?

TOS applies on salary, which is broadly defined to include all remuneration, wage, bonus, overtime, compensation, overtime, bonus, cash allowances. TOS rate is from 0% to 20%.

FBT applies on fringe benefits, which is defined to include any goods, services, other benefits in cash or in kind (e.g. house, utilities, food, discount on sale of goods, educational assistance etc.), provided directly or indirectly by an employer to employee for their personal benefits rather than for business purpose. FBT rate is fixed at 20%.

What is the TOS rate for resident and non-resident?

The resident employee will be taxed based on the progressive TOS rate as follows:

Taxable monthly salary	Rate
From 0 Riel to 1,300,000 Riels (USD325)	0%
From 1,300,001 Riel（USD325）to 2,000,000 Riels (USD500）	5%
2,000,001 Riels（USD500）to 8,500,000 Riels（USD2,125）	10%
8,500,001 Riels（USD2,125）to 12,500,000 Riels（USD3,125）	15%
12,500,000 Riels（USD3,125）above	20%

The non-resident employee shall be subject to TOS at flat rate of 20%.

What are the criteria for residency status?

If the individual meets one of the following residency criteria, he/she is considered as a resident employee in Cambodia for TOS purpose.

• Has a residence located in Cambodia (whether he/she owns, rents, or has available for use and staying in Cambodia)
• Has principal place of abode in Cambodia based on factors such as centre of economic interest, the amount of time spent, the nature of time spent, where that person’s family resides, where the bank accounts are held, and where the main social activities take place
• Has presence in Cambodia for more than 182 days in 12-month period

Claiming rebate for spouse and children

Only resident employees can claim the rebate for spouse and children of 150,000 Riels per person per month. Certain criteria must be met to claim such rebate for offsetting against taxable salary. They are as follows:

• Spouse must not work.
• Children under the age of 14-year-old or below 25 years if they are a full-time student at recognized educational institutions.

(TOS Prakas)

Withholding Tax (WHT)

What is Withholding Tax?

As Personal Income Tax has not been officially applied in Cambodia, the GDT currently implements WHT as a mechanism to collect tax from any physical or non-resident persons who earn Cambodia-sourced income but are not registered with the tax department.

Who’s responsible for withholding and remitting the tax to the tax authority? When is the WHT payable?

The payer, which is a legal entity/registered taxpayer, has an obligation to withhold the tax before making payment to the income recipient, remit the WHT payable to the tax department and file WHT return by 20^th of the following month during their monthly tax declaration.

WHT is payable at the time the expense is incurred whether it is paid or accrued.

What is the WHT rate?

A resident taxpayer (e.g. a legal entity) who make the following types of payment in cash or in kind to a resident and non-resident person shall be subject to WHT rate as follows:

Type of payments	Resident	Non-resident
	Rate	Rate
Rental of movable and immovable property1	10%	14%
Service performed in Cambodia2	15%	14%
Interest paid to a legal entity/physical person which is not financial institution3	15%	14%
Interest paid by domestic financial institution to a resident taxpayer for fixed deposit	6%	N/A
Interest paid by domestic financial institution to a resident taxpayer having non-fixed saving account deposit	4%	N/A
Royalties for intangible assets or for benefit from interest in mineral4	15%	14%
Other Cambodian-sourced income which includes:	N/A	14%

¹Payment for rental of movable or immovable property from a self-declaration taxpayer (registered taxpayer) to another self-declaration taxpayer (supported by valid VAT invoice) is exempted from 10% WHT.

²Payment for service including management, consultancy and similar services from a self-declaration taxpayer to another self-declaration taxpayer or payment for service with amount under KHR 50,000 (supported by valid VAT invoice) are exempted from 15%.

³Payment for interest to domestic financial institutions is exempted from WHT.

⁴Royalties for intangible assets are defined as follows:

• The right to use the copyright publication and sell literary, artistic, scientific or similar rights (including copyrights and broadcasting audio or video…) patent, business franchise, brand, trademark, drawing, template, plan, formula, secret recipe
• Other intangible assets or rights
• Knowledge, know-how or information related to industry, trade, science, technology, technique…
• Transfer of knowledge or information
• Advice or services on the application or use of rights describe in this sub-paragraph

Are there any other expenses exempted from WHT?

Below is the list of payment exempted from WHT:

• Payment for royalties and rental to government institutions (the property must be state-owned and the payment must be certified from the Ministry of Economy and Finance that it is for state budget.)
• Interest expense paid to non-resident taxpayers by government institutions for the loan recognized by the Ministry of Economy and Finance
• Payment for income of physical person which has been subject to Tax on Salary and Fringe Benefit Tax
• Payment for the following types of software to a local self-declaration taxpayer or registered taxpayers (supported by valid VAT invoice): 1) shrink-wrap software, 2) site license, 3) downloadable software, 4)software bundled with computer hardware

(Law on Taxation, TOI Prakas No. 098 dated 29 January 2020)

Specific Tax on Certain Goods or Service (SPT)

What is SPT?

SPT is a tax imposed on:

• certain goods which is locally produced or imported including alcoholic beverages, beers, cigarettes or cigars, non-alcoholic beverages, air-ticket
• certain services performed in Cambodia including entertainment and telecommunication service

What is the calculation method and the rate of SPT?

The calculation method for SPT base and SPT payable is as follows:

1. For a locally-produced beer, wine, cigarettes, cigars, non-alcoholic beverages, and other locally produced products which are subject to SPT, the SPT base is 90% of invoice price exclusive of VAT, Public Lighting Tax (PLT) and SPT. To find the SPT payable, apply the SPT rate on the SPT base.
2. For imported products, SPT applies on the full invoice price.
3. For air ticket and telecommunication service, the SPT base is selling price excluding VAT and SPT. To find the SPT payable, apply the SPT rate on the SPT base.
4. For entertainment – (1) karaoke, restaurant (price inclusive of beer, wine, cigarette) – SPT base is the selling price excluding VAT, PLT and SPT, (2) massage services – SPT base is the selling price excluding VAT and SPT. To find the SPT payable, apply the SPT rate on the SPT base.

(Prakas 012 MEF.PrK dated 12 January 2020)

What is SPT?

Below is the rate for SPT:

Goods/Services	Rate
Locally produced or imported alcoholic beverages	35%
Locally produced or imported beers	30%
Locally produced or imported cigarettes or cigars	20%
Locally produced non-alcoholic beverages	10%
Local and International air tickets sold in Cambodia	10%
Entertainment service	10%
Local and International telecommunication services	3%

What is SPT payable?

SPT is payable by 20^th of the following month which the supplies are made.

(Prakas 012 MEF.PrK dated 12 January 2020)

Public Lighting Tax (PLT)

What is PLT?

PLT applies on the sale of cigarettes, cigars, wine and beers. Then, the purpose of collecting the PLT payable is that the government will use the tax revenue from PLT to fund public electricity. PLT is imposed on from production to supplying stages of the above goods.

PLT base	– For the first manufacturer or importer, PLT base is the selling price based on invoice issued to customer including all taxes except PLT and VAT. -For subsequent distributor/seller, PLT base is 20% of the invoice price including all taxes except PLT and VAT.
PLT rate	3% of the PLT base (calculated as above)

When is PLT payable?

PLT is payable by 20^th of the following month which the supplies are made.

(Prakas 012 MEF.PrK dated 12 January 2020)

Accommodation Tax (ACT)

What is ACT?

ACT is taxed on the accommodation services including hotel, apartment, suite, resort, motel, lodge, bungalow, guest house, tourist camping and other accommodation services.

What is ACT rate?

To calculate the ACT payable, the ACT rate at 2% applies on the invoice price charged to customers excluding ACT and VAT.

When is ACT payable?

ACT is payable by 20^th of the following month which the supplies are made.

(Law on Taxation)

Contact us if you need more information or specific advice.