Effective from 1 April 2024, this Prakas is issued by the Ministry of Economy and Finance (MoEF) to provide further clarifications on the rules and procedures of implementing Public Lighting Tax (PLT).

Below are the key details under this Prakas: 

Any provisions contrary to this Prakas shall be abrogated.

Our comments

This new Prakas provides further clarity on the revisions on the imposition of PLT as introduced under the New LoT and Sub-Decree no. 286. Whilst there is an increase in the PLT rate (i.e., from 3% to 5%), PLT shall only be imposed one time, i.e., on the first supply within the supply chain (previously 3% PLT was imposed on all stages of the supply chain).

Impacted taxpayers should also take note of the proper time of supply rules applicable for PLT to ensure proper compliance and avoid penalties. 

Effective from 11 March 2024, this new Sub-decree on VAT shall cover the rules and procedures on the implementation and collection of VAT on supply of taxable goods/services in Cambodia, including the updates on the VAT rules and regulation previously covered under VAT Sub-Decree no 114, dated 24 December 1999.

This new VAT Sub-Decree also reflects the changes introduced under the 2023 New Law on Taxation (LoT), including the rules on VAT on E-commerce under VAT Sub-Decree no. 64, dated 8 April 2021.

Below are the key updates of the new VAT Sub-Decree: 

Any regulations contrary to this Sub-decree shall be abrogated.

Our comments

Since the implementation of the old VAT Sub-Decree no. 114 in 1999, business models and terms of trade have evolved, and with the advent of globalization, companies have found new ways of doing business in a country without the need to establish a local presence in said country.

The new VAT Sub-decree will replace the existing VAT Sub-Decree 114, bringing significant revisions and updates to ensure consistency in the implementation of the VAT rules, in light of the recent changes introduced under the New LoT and new rules and regulations, with the aim to expand the tax base and minimize tax leakage in the collection of VAT for supply of taxable goods and services in Cambodia.

One notable change is the requirement to apply VAT “reverse charge” on imported services introduced under Art. 23(3) of the new VAT Sub-Decree. The VAT “reverse charge” mechanism was introduced earlier under VAT Sub-Decree no. 65 which covered E-commerce services supplied in Cambodia. Under Art. 23(3), it appears that the VAT “reverse charge” obligation may not be limited to E-commerce supplies only but apply to a wider scope of services (i.e., E-commerce related or not) provided by nonresident suppliers. It is noteworthy to highlight that the “reverse charge” mechanism under the VAT regime applied in other jurisdictions covers all transactions considered as “imported services”, regardless of whether the services are E-commerce related or not. This new provision requires further clarification from the GDT.

A major positive development introduced under the new VAT Sub-Decree is the extended period to claim input VAT credits (i.e., extended up to 60 days from the time of supply or importation). This would mitigate issues on disallowed input VAT claimed by taxpayers due to late issuance or receipt of proper VAT invoices. Considering the foregoing, it would be reasonable to expect that the online VAT Declaration system of the GDT will be updated to account for these new rules. 

This Sub-decree is issued by the Royal Government of Cambodia (RGC) to determine the threshold of monthly taxable salary of resident employees subject to ToS and the threshold of annual taxable income realized by sole proprietorship and distributions to each member of a partnership subject to annual tax, which shall be effective from 11 March 2024.

The threshold of monthly taxable salary of resident employees subject to ToS are as follows:

For resident employees, the tax relief for the spouse and for each dependent child amounting to KHR150,000 per person per month shall be deducted from the gross salary of the employee to arrive at the taxable salary base. In cases where both spouses are employed, the tax relief shall be applied to only one spouse.

The threshold of annual income subject to annual tax (i.e., for a sole proprietorship and income distributed to each member of a partnership that is not considered a legal person) are as follows:

Our comments

Most of the contents of this Sub-decree, including the threshold of monthly taxable salary and annual taxable income determined in this Sub-decree, remain unchanged if compared to the prevailing tax law and regulations concerning tax on salary. Nevertheless, it should be noted that unlike the former Subdecree No. 196 dated September 2022, the annual income threshold does not apply to physical persons, which appears to provide temporary relief for individuals who are earning income aside from income from employment activities. On the other hand, this may pose a question about the government's previous intention to implement a personal income tax (PIT) regime in Cambodia.

Everyone must remain vigilant for any further developments in this area. 

This Sub-decree is issued by the RGC to determine the patent tax rates which shall be applied for a taxable person conducting business in the Kingdom of Cambodia.

Effective from 11 March 2024, the patent tax payable shall be determined as below:

Taxpayers who started their business operations within the last 6 months of the calendar year shall only pay half of the patent tax above.

Our comments

It is noted that the rates of patent tax determined in this Sub-decree remain the same as the prevailing tax law and regulations. All taxpayers must ensure timely renewal and payment of their annual patent tax obligation.

As committed tax advisors to our clients, we welcome any opportunities to discuss the relevance of the above matters to your business.