Intermediate Microeconomics Chapter 1

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KINGDOM OF CAMBODIA
NATION RELIGION KING

Ministry of Economy and Finance General
Department of Taxation

Tax System and Tax Regime in Cambodia
Prepared by 1- Mr. Tech Sokun Thearith,
Litigation Office 2- Mr. Chuor Se, Legal Office
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Contents

• I-Tax System
• II-Tax Regime

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I-Tax System

• There are 15 type of Taxes, divided into State
  Budget and Capital-Provincial Budget

I. State Budget II. Capital-Provincial Budget
1.Tax on Profit (TOP) 8.Registration Tax (Tax on property transfer)
2.Tax on Salary (TOS) 9.Tax on Unused Land
3.Value Added Tax (VAT) 10.Accommodation Tax
4.Excise Tax 11.Public Lighting Tax
5.Turnover Tax 12.Patent Tax
6.Tax on Property Rental. 13.Vehicles tax
7.Stamp Tax 14.Slaughter tax
15.Property Tax
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1-Tax on Profits

• Tax Rate
• 20 Legal persons
• 30 Oil and Gas and Natural Resource
• 9 Qualified Investment Project (QIP) for
• transitional period 5 years
• 0 QIP for exemption period.
• 5 of gross premiums for insurance company
• Physical Persons which have annual profit
  Tax Rate
• From 0 to 6,000,000 Riels 0
• From 6,000,001 to 15,000,000 Riels 5
• From 15,000,001 to 102,000,000 Riels 10
• From 102,000,001 to 150,000,000 Riels 15
• Greater than 150,000,000 Riels 20

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1-Tax on Profits (cont)

• Withholding Tax
• For resident
• 15 income from service (management and
  consulting)
• 10 income from rental of movable and immovable
  property
• 6 interest in come from fixed term deposit
  account
• (banking institution)
• 4 interest income from non-fixed term deposit
  account
• (banking institution)
• For non-residents
• 14 for interest, royalty, rent, dividends,
  compensation
• for management or technical
  services, and income
• connected with use of property.

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1-Tax on Profits (cont)

• Additional Profit Tax
• This tax shall not apply on the distribution of
  retained earning, if an enterprises has already
  paid profit tax at the normal rate of 20 for a
  legal person.
• Tax Rate
• 20 of retained earning, if an enterprise is
  distributing
• profits which were subject to 0 profit tax
  rate.
• 11/91 of retained earning, if an enterprise is
  distributing
• profits which were subject to 9 profit tax
  rate.
• 0 of retained earning, if an enterprise is
  distributing
• profits which were subject to 20 profit rate.

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1-Tax on Profits (cont)

• Minimum Tax
• 1 of the annual turnover. This tax is due
  irrespective of the taxpayer profit or loss
  position.
• Impose on real regime taxpayers.
• is a separate and distinct tax from the tax on
  profits.
• This tax may reduce the annual tax on profits.
• Exemption
• - Government institutions
• - Religious organizations
• - Charitable, scientific, literary, educational
  or
• labor organization
• - Any chamber of commerce, industry, or
  agriculture.

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2 - Salary Tax

• Tax Rate A resident physical person is liable to
  the monthly tax on salary and withheld by the
  employer
• Rate
  
• From 0 Riels to
  500,000 0
• From 500,001 to 1,250,000
  5
• From 1,250,001 to 8,500,000
  10
• From 8,500,001 to 12,500,000 15
• From 12,500,001 to upwards 20
• For non-resident physical person 20 are
  withheld by the employer.
• 20 of the total values of fringe benefits are
  withheld by the employer.

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2- Salary Tax (cont)

• Exemptions
• - Diplomatic and consular, foreign
  representative, international organizations and
  agencies of technical cooperation of other
  governments
• - Members of the Parliament and Senate
• - Real refunds on professional expenses
• - Indemnity for the layoff
• - Additional remuneration with social
  characteristics
• - A flat allowance for mission and travel
  expenses.

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3 VAT (Value added Tax)

• Tax Rate
• Uniform rate of 10
• Taxable supply
• - The supply of goods or services by a taxable
  person in the Kingdom of Cambodia
• - The appropriation of goods for his own use by
  the taxable person
• - The making of a gift or supply at below cost of
  goods or services by the taxable person
• - The import of goods into the customs territory
  of the Kingdom of Cambodia.

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3 VAT (Value added Tax)

• Non Taxable Supplies
• Public postal service
• Hospital, clinic, medical, and dental services
• The service of transportation of passengers by a
  wholly state owned public transportation system
• Insurance services.
• The importation of articles for personal use that
  are exempt from customs duties
• Non profit activities in the public interest that
  have been recognized by the Minister of Economy
  and Finance.
• Non taxable supplies for diplomatic missions and
  international organizations
• - The imports of goods for/by foreign diplomatic
  and consular missions, international
  organizations and agencies of technical
  cooperation
• - The import of goods for the personal use of the
  official personnel of missions and organizations.

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4 -Turnover Tax

• Tax rate 2
• Applied to any persons subject to the Estimated
  Regime system.
• Turnover tax payable each month may be fixed in
  advance for period of 3,6,12 months.
• Tax base
• - Its imposed tax on supply both goods and
  services in Cambodia.
• Exemption
• - The sale of agricultural products that habitual
  agricultural work of farmers.

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5 - Excise Tax

• Tax Rate
• - 20 for beer
• - 10 for all types beverages, tobacco product,
  hotel and other entertainment services and
  airline tickets
• - 3 for telecommunication services.
• Tax Base
• - 65 of invoice price excluded VAT.
• - A tax levied on select products both locally
  produced and imported.

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6-Tax on Property Rental

• Tax Rate
• - 10 income from rent
• Tax Base
• - A tax on receipts from rents on land, building
  and
• certain equipment paid by the owner.
• Exemption
• - Property owners whose monthly income from rent
• is below CR 500,000 under the estimate regime
  are
• exempted.

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7 - Stamp Tax

• Nature of Tax
• This tax is payable in the form of stamps affixed
  to some documents, panos/posters (advertising),
  and trade marks.
• Tax Rate
• - Specific small amounts depending on the type of
  document ranging from CR 100 for school
  registration to CR 2,000 for investment
  authorizations.
• - The person who supplies these products is
  responsible for the payment of this tax to the
  tax administration.

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8 - Registration Tax (Tax on property transfer)

• Tax rate is generally levied at 4 of the
  transfer value.
• Tax levied on the rights transfer of immovable
  properties inform of sale, exchange ,donated and
  shareholder such as land, buildings, houses,
  vehicles.
• Exemption for transfers of property of the
  State, government transfers, public utilities,
  and charitable organizations.

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9- Tax on Unused Land

• Tax Rate 2 of the land value
• Tax base is evaluated by the Commission for the
  Evaluation of Unused Land.

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10 - Accommodation Tax

• Tax Rate 2 of the rental price
• Tax Base
• - Rental price per room including all taxes and
  service charges, except VAT.

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11 - Public Lighting Tax (PLT)

• Tax Rate
• - 3 of the selling value of alcoholic drinks and
  cigarette.

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12 Patent Tax

• Nature of Tax
• An annual registration or license fee levied on
  all business, industries, and services. The base
  is the previous years turnover. New businesses
  are taxed on the basis of a provisional estimate.
• Exemption
• Farmers are not subject to the tax.

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13 - Vehicles Tax

• Nature of Tax
• - Annual levy on vehicles and boats
• Exemption Vehicles
• - Ambulance and fire truck vehicles of the
  Royal Cambodia Force, military police, national
  police vehicles owned by diplomatic missions and
  international organizations.

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14 - Slaughter Tax

• Nature of Tax
• - Tax levied on slaughterhouses based on the
  value of
• the livestock that is slaughtered.
• Exemption
• - Exempted from slaughter tax are livestock
• slaughtered for celebrating national
  tradition, for
• research uses and killed in accident.

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15- Property Tax

• It is yearly tax on land, house and buildings
• The tax rate is 0.1 on the Asset Value after
  deducting 100 million riels (USD25,000)
• The exemption
• property less than 100 million riel
• Agriculture land
• Property owned by the Royal Government
• Property owned by any organization or person in
  relation to nonprofit religious and charitable)
• Property owned by a foreign government diplomatic
  or consular, and agencies of technical
  cooperation of other government.

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II- Tax Regimes

• Two Regimes
• 1. Self Assessment System (Real Regime)
• 2. Official Assessment System (Estimated
  Regime)

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1-Self Assessment System

• Criteria for Self Assessment System
• - All legal persons
• - Enterprises that have annual taxable turnover
  exceed
• 500 million Riel for the supplies of goods
• 250 million Riel for the supplies of services
  and
• 125 million Riel for Governments contract value.
• Other Enterprises register voluntarily

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1-Self Assessment System (Cont)

• Register within 15 days of starting economic
  activity.
• VAT Registration Within 30 days of the day on
  which the person becomes a taxable person.
• Tax Declaration
• Profit tax In the period of 3 months after the
  end of the tax year.
• VAT The 20th day of the month following the
  month in which the payment is made.
• Other Tax Including Prepayment The 15th day of
  the month following the month in which the
  payment is made.

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1. Official Assessment System

• Determination of taxable turnover is based on the
  discussion between tax officers and taxpayers.
• This tax level on estimated profit shall be kept
  constant for a period of 3 months, 6 months or 1
  year.
• Declaration Every year by October 31, in the
  form provided by the tax administration.

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Thank you