Value Added Tax (VAT) is one of the key indirect tax compliances for enterprises supplying goods in Cambodia and imported goods into Cambodia with the standard rate of VAT at 10%. The supply of digital goods or services or e-commerce transactions by non-residents who do not have a Permanent Establishment in Cambodia is also triggered Cambodia’s VAT at 10%. The zero rate applies to exported goods and services and certain charges in relation to the international transportation of people and goods. Also, this zero-rating is applicable for any goods and services supplied by Supporting Industry Qualified Investment Projects (QIPs)/contractors to certain export industries. VAT on the supply and import of certain agricultural products shall be borne by the State (i.e., State Charges). 

Exempt supplies include public postal services; certain medical and dental goods and services; wholly state-owned public transportation services; insurance services; primary financial services; educational services; importation of articles for personal use that are exempt from customs duties; non-profit activities in the public interest recognised by the Ministry of Economy and Finance; supplies education services; supplies of unprocessed agricultural products; supply of electricity; supplies of water for public consumption and solid and liquid trash collection or cleaning services.

Other indirect taxes include the following:

  • Accommodation tax – 2% on accommodation service
  • Specific tax on certain merchandise and services – the varied rate depending on specific goods or services
  • Tax for public lighting – 3% on alcoholic and tobacco products


Why is Indirect Tax important?

There have been several key reforms to the tax system in recent years by the Tax Authority. Notably, Cambodia’s Ministry of the Economy and Finance (MEF) has issued a revised Prakas on tax registration and updated information which provide for more methods for the Tax Authority to manage, control and enforce the registration of taxpayers including fieldwork at the taxpayer’s address or summons of a representative individual to present themselves at the tax administration, unilateral tax registration and the introduction of a negative list, which shall be shared to an intra-ministerial database usable by other competent authorities. There are also related penalties being levied for those who have not complied with the tax registration rule and subsequently do not comply with filing and paying the relevant applicable taxes to them based on their specific business transactions.

In addition to that, the MEF has also recently issued various circulars to provide guidance on invoicing and credit/debit notes issuance requirements and potential consequences from both suppliers’ side as well as purchasers’ side in the case that they have not fulfilled such requirements properly, for instance, imposing relevant financial penalties for underpayment of VAT, deny the VAT credit claim and deduction of the expenses on the purchases, etc. 

The most recent reform is that on September 8, 2021, the MEF issued Prakas No. 542, which requires non-resident suppliers of digital goods or services or e-commerce activities to register for, collect, and remit VAT.  While its effective date of implementation has been delayed a few times, the Tax Authority has stated it will be strictly enforcing the implementation, starting from the taxable month of April 2022 onwards. Any non-compliance will be subject to various penalties and fines being imposed based on the tax law. In this respect, it is crucial for both local purchasers as well as non-resident suppliers to comply with the requirement based on the tax regulation.

As above, VAT and/or other taxes that are applicable for specific business transactions can be complex and costly as any non-compliances with its regulated rule and obligations can represent a substantial outflow of funds from a business and a drain on management time due to increased reporting requirements, greater scrutiny by tax authorities and harsher penalties for non-compliance.


Our Indirect Tax Team focus on effective indirect tax planning, compliance, and related cash flow management, helping companies improve profitability and build stakeholder value. In addition to tax advisory services, KPMG helps businesses manage their tax compliance obligations. We also work with our KPMG offices internationally to assist multinational groups to co-ordinate and comply with their tax compliance obligations on a global basis.

Our services:

  • Indirect taxes Preparation and Compliance Management
  • Review Returns Prior To Filing
  • Historical Tax Compliance Review
  • Tax Advisory and Planning
  • VAT Refund Assistance
  • Seeking Tax Ruling 

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