Cambodia: Implementation of VAT on imported cigarettes
Instruction 017 MEF/GDT provides for the implementation of VAT for enterprises that import or distribute imported cigarettes
Instruction 017 MEF/GDT provides for the implementation of VAT for enterprises that import
Guidance from the Ministry of Economy and Finance—effective 1 August 2023—provides for transparent and consistent implementation of value added tax (VAT) for enterprises that import or distribute imported cigarettes.
According to Instruction 017 MEF/GDT (dated 25 July 2023):
- For imported cigarettes for the purpose of domestic sales, enterprises need to apply 10% VAT like other imported goods that require to collect 10% VAT for all cigarette supplies in Cambodia, and the corresponding input VAT on the importation or local purchase is to be creditable against the output VAT.
- For imported cigarettes for the purpose of exporting, enterprises are allowed to only pay the 10% VAT upon importation, as per previous practice.
- Enterprises must have the obligations to declare and pay the VAT as per prevailing laws and regulations.
KPMG observation
Previously, the government provided certain VAT exemptions on the local supply of imported cigarettes to support the industry. This new instruction now clarifies the applicability of 10% VAT on the supply of imported cigarettes in Cambodia, consistent with the mechanism and design of Cambodia’s VAT system.
Read an August 2023 report [PDF 157 KB] prepared by the KPMG member firm in Cambodia
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