Cambodia: New law on taxation
A new law on taxation consolidates 15 types of existing taxes in Cambodia under one law
A new law on taxation consolidates 15 types of existing taxes in Cambodia under one law
A new law on taxation (2023)—effective 16 May 2023—consolidates 15 types of existing taxes in Cambodia under one law and was promulgated to complement, provide consistency, and close the gaps of the existing regulations.
Significant updates in the new law on taxation relate to:
- Tax on income
- Value added tax (VAT)
- Specific tax
- Public lighting tax
- Tax on advertising banner
- Tax on immovable property rental
- Stamp duty
- Tax on transportation means
- Rules and procedures on taxation
- Regulatory penalties
- Tax evasion offense
Newly added articles that concern the objective, scope, and rules and procedures in tax collection include:
- Patent tax
- Capital gain tax
- Rules and procedures on taxation
- Regulatory penalties
KPMG observation
Law on taxation (2023) has consolidated and expanded the previous tax laws promulgated since 1985 and other subsequent amendments throughout the years with the stated purpose of providing consistent and updated provisions under one law. Notably, there are several provisions under law of taxation (2023) stating that the rules and procedures on the implementation of the tax collection would be determined by the Ministry of Environment and Forests’s Prakas.
The new law of taxation:
- Aims to minimize tax leakage arising from transactions that are not currently subjected to tax (or still a “grey area”) under existing tax laws and regulations
- Grants explicit power to the tax administration to grant tax exemption/incentives (subject to specific conditions), undertake tax crime investigations, or even redetermine the nature/elements of the transaction
- Imposes stricter enforcement of penalties for non-compliance, plus the added provisions imposing criminal penalties for tax evasion, and malpractices with the intention to defraud the government
In light of the changes introduced under the new law of taxation, the tax administration needs to provide further guidelines and new regulations to clarify and/or implement the rules moving forward. It is vital for taxpayers to be aware of these changes and be able to assess how these changes may affect their tax position and tax obligations and compliance process. It is equally important to stress the importance of having a trusted tax advisor to help taxpayers navigate through these changes and provide that proper compliance review and tax planning opportunities are optimized.
Read a June 2023 report [PDF 319 KB] prepared by the KPMG member firm in Cambodia
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