Cambodia: Amendment on implementation of VAT on e-commerce

Guidance to further clarify and add some rules and procedures for implementation of VAT on e-commerce transactions

Amendment on implementation of VAT on e-commerce

The General Department of Taxation (GDT) issued Instruction No. 2520 (dated 24 January 2023) to replace Instruction No. 20522 (dated 8 December 2021), and to further clarify and add some rules and procedures for the implementation of the value added tax (VAT) on electronic commerce (e-commerce) transactions.

Under this new instruction:

  • The non-resident taxpayer who only has transactions with its related party (e.g., subsidiary or branch) in Cambodia is exempted from simplified VAT registration, but its related party in Cambodia needs to notify the GDT.
  • For business-to-business (B2B) transactions, the self-assessment taxpayers who have already filed the monthly tax declaration can amend the VAT amount by using credit notes issued by the non-resident taxpayers. However, VAT credits resulting from this amendment are only deductible against VAT reverse charge.

There are no other changes to the rules/guidance provided under the previous Instruction No. 20522.

KPMG observation

This exemption on the simplified VAT registration for related party transactions will help reduce some burden on the part of the non-resident taxpayers in terms of complying with their monthly e-VAT declaration obligations; however, the local resident related party must still comply with its VAT “reverse charge” declaration obligation. Furthermore, as there is a need for the latter to notify the GDT of such transaction, both parties must provide that any related party transaction adheres to the “arms-length” principle to manage any potential transfer pricing adjustment risk.

Notably, the above-added rules were already mentioned in some of the public discussions and frequently asked questions (FAQs) issued by the GDT during the launching of the new VAT on e-commerce transactions.

The new instruction could be effective from 24 March 2023 onwards (i.e., 60 days from date of issuance), but there is no clear effective date indication in the new instruction.

Read a February 2023 report [PDF 123 KB] prepared by the KPMG member firm in Cambodia


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