Tax authorities worldwide are under increasing pressure to generate revenue, causing a rise in tax audit activity across all taxing jurisdictions and all types of tax. Particular uncertainty can arise as global businesses seek to access new and developing markets where the local tax environment may be unfamiliar and could be extremely unpredictable.

This pressure on tax authorities is resulting in more investigation, larger adjustments, and increased potential for penalties and interest. Wherever you do business, it’s important to approach your tax matters proactively and be ready to respond if and when a local tax investigation begins. KPMG’s Dispute Resolution & Controversy professionals can help you prepare to manage any tax authority challenge that comes your way.

Why is Dispute Resolution and Controversy advice important?

If you know your company is going to undergo a tax audit:

Your company was audited before and was subject to significant tax reassessment.
Tax issues in the last tax audit are recurring and are complicated by different laws and regulations in different tax periods.
Your team is inexperienced in dealing with the tax inspection process.
Your team is not confident in the current tax compliance position or the completeness of tax and accounting information and documentation.

The current tax regulations provide the Cambodian tax authority with the power to carry out an audit of a taxpayer’s activities and to reassess tax if the taxpayer has not complied with the tax laws and regulations.

The periods, in which tax audits can be conducted, are the current and one year back for limited audits and up to 3 years back for comprehensive audits, or can be 5 years if there is evidence of fraud, losses or tax credit carried forward from longer than 3 years ago, etc. (i.e. the 4th or 5th year); or longer if there is clear evidence of tax evasion, but the tax authority must request the Ministry of Economy and Finance (MEF) for approval. Tax reassessments raised by the tax authority will be based on the monthly and annual tax returns submitted by the taxpayer. In addition, the tax authority can rely upon other declarations and information submitted by the taxpayer and other information received by the tax authority from other sources.

Important to note is that currently there is no independent Tax Court or Tribunal to hear disputes between taxpayers and the tax authority, and the final decisions rest with the tax authority itself. A "Committee for Tax Arbitration" was set up, under the MEF. It is stated that this committee will play the role of a third-party arbitrator if the taxpayer is dissatisfied with the tax authority's decision on the initial protest above. However, as a matter of practical reality there is limited recourse for a taxpayer in any dispute with the tax authority.

Furthermore, the government budget for tax revenue has been increasing from year to year. In this regard, companies can expect much more aggressive tax audits to be conducted by the tax authority as it has a revenue goal to achieve.

All of the above indicate that a high level of care must be taken when dealing with the tax auditor from the tax authority.

Successful outcomes are a journey and the result of having the right people with the right knowledge along every step of the way. Our team of specialists has extensive experience in assisting clients to resolve tax disputes whilst maintaining an effective working relationship with tax authorities on your behalf. We can assist clients throughout the entire process by providing advice in all areas of taxation, from tax audit preparation right through to appeals to the highest tax authority.

Why KPMG

KPMG brings a wealth of experience to the table.
KPMG is well placed to provide tax audit support services.

We are the biggest accounting, audit, and tax firm in Cambodia.
We have teams of tax professionals experienced in tax audit support.
We can help with the right response to the issues and questions raised by the tax auditors.
We can anticipate the issues and concerns of the tax auditors from their inquiries.
We can help you choose and develop an appropriate resolution strategy, often before a tax dispute arises.
We have extensive knowledge and experience to help you obtain the best possible outcome in tax disputes and controversies.
As a full-service provider, we’re with you from start to finish.

How can we help?

Resolving tax issues requires extensive knowledge and understanding of the procedures and requirements applied by the relevant authorities in Cambodia. We can provide a wide range of services to meet your needs. Pre, during, and post the tax audit process, KPMG will provide you with support in:

Pre-filing/pre-examination assistance:

Reviewing and examining the tax filings and discussing with your team the potential tax examination challenges and risks.
Reviewing the tax auditors’ requests of records, information, and documents, and advising your team on the preparation and arrangement of the information to the tax auditors.
Advising your team on the necessary technical arguments and supporting documents for specific tax issues under review/audit.

Examination assistance:

Participating in the tax audit process and assisting in presenting the requested information to the tax auditors.
Preparing appropriate responses to inquiries raised by the tax auditors.
Providing input based on our research into relevant tax laws, regulations, and tax precedents and advise your team on the technical details.
Providing comments and recommendations to management on issues raised by the tax auditors.
Working with your team to quantify potential tax exposure.
Reviewing correspondence from the tax auditors (such as working minutes and the draft tax audit working), recommending a position to be taken by you, and preparing appropriate responses.

Post-examination assistance:

Advising your team on the administrative protesting process.
Assisting with the administrative protesting against the General Department of Taxation.
Please contact us for further information.

Experience counts when facing a tax inspection. KPMG can help.