This ultimate guide provides an overview of the key concepts of value-added tax in Cambodia.
Some goods and services in Cambodia are subject to value-added tax (VAT), while others are not subjected to any VAT or are applicable to claim zero-rated VAT.
Find out more about VAT in Cambodia below.
What is VAT?
Value-added tax (VAT) is a tax that is added to the price of goods or services provided by a company.
VAT rates in Cambodia
The supply of goods and services in Cambodia are subject to the standard VAT rate of 10%.
The zero-rate applies to the following goods and services:
- Goods and services supplied by Supporting Industry Qualified Investment Projects (QIPs)
- Services performed within Cambodia but used outside of Cambodia directly or entirely by a non-resident entity
- Services performed outside of Cambodia or used outside of Cambodia for a non-resident entity
- Domestic supplies of paddy rice
- Domestic supplies of milled rice or milled rice production services by contractors to the rice exporters
- Domestic supplies of specific agricultural products, including all types of fertilisers, plant seeds, animal medicine, animal food, animal species and agricultural machinery and tools
- Cut, Make and Trim (CMT) services – CMT services are provided by garment factories in Cambodia
- Supply of international transportation services
- Supporting industries that supply export-oriented garments, textile and footwear industries
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How to claim zero-rated VAT
In order to claim 0% VAT, the taxpayer must provide the following documents:
- An agreement clearly specifying the service charge, type of service and the location where the services are performed
- Documents showing payments remitted from outside of Cambodia to a bank in Cambodia
- An original invoice
- Valid accounting records
Supplies not subject to VAT
Supplies that are exempted from VAT include:
- Public postal services
- Medical and dental goods and services
- Wholly state-owned public transportation services
- Insurance services
- Primary financial services, which profit is from deposit, credit or loan transactions, initial public offerings of stock, trading of stock, currency exchange or trading of gold
- Educational services
- Non-profit activities recognized by the Ministry of Economy and Finance
- Unprocessed agricultural products
- Supply of water and electricity
- Solid and liquid waste collection services
VAT on the disposal of fixed assets
According to Instruction 15301 issued by the General Department of Taxation (GDT), any company that disposes tangible assets used in a business must account for 10% VAT, unless the assets that were disposed of as part of the transfer of an ongoing business.
Who must register for VAT in Cambodia?
Companies that provide taxable goods and services must register for VAT if they meet one of the following conditions:
- Is a taxpayer with a taxable turnover of goods sold exceeding KHR 125 million for the preceding three consecutive months or is likely to exceed this in the next three consecutive months
- Is a company, importer, exporter or an investment company
- Is a taxpayer with a taxable turnover of services provided exceeding KHR 60 million for the preceding three consecutive months or likely to exceed this in the next three months
- Is a taxpayer with government contracts with a total taxable turnover of more than KHR 30 million
VAT registration must be made at the beginning of the business operations or within 30 days which the taxpayer becomes a taxable person.
Are foreign companies required to register for VAT in Cambodia?
Foreign companies can only register for VAT if they have an official presence in Cambodia, such as foreign companies that have registered with the Ministry of Commerce in the form of a foreign branch.
When to file VAT returns in Cambodia?
VAT returns and payments must be filed and paid to the GDT by the 20th of the following month in which the VAT was charged on the invoice.
Payments should be made in cash or cheque to the local bank in Cambodia, and the payment must be in Cambodian Riel.
What is included in the VAT return?
The following must be included in the VAT return:
- Company name
- Input VAT brought forward
- Input VAT carried forward
- Monthly creditable and non-creditable purchases
- Monthly taxable and non-taxable sales
- Output VAT
- Period of the VAT return
- Refund
VAT refunds
Who can apply for VAT refunds?
Only medium and large taxpayers are eligible to request a VAT refund.
Small taxpayers will only have up to 80% of the VAT input credits to its VAT output on sales.
The following table determines whether a company is a small, medium or large taxpayer.
| Type of taxpayer | Criteria |
| Small (sole proprietorship or partnership) | Annual turnover of KHR 250 million to KHR 700 million |
| Total turnover for any three consecutive months in the calendar year from KHR 60 million | |
| Total expected turnover for the next three consecutive months from KHR 60 million | |
| Participating in bidding, price consultation or surveys for the supply of goods or services | |
| Medium | Annual turnover of KHR 700 million to KHR 4,000 million |
| Registered as a legal person or representative office | |
| National or sub-national state institutions, associations and non-government organisations | |
| Foreign diplomatic and consular missions, international organisations and technical cooperation agencies of other governments | |
| Large | Annual turnover of more than KHR 4,000 million |
| Subsidiary of multi-national company or branch of a foreign company | |
| Qualified Investment Projects (QIP) The following activities are not allowed to apply for QIPs:
|
Medium and large taxpayers’ criteria
The criteria for a refund for medium and large taxpayers are:
- The monthly VAT input credit is higher than the monthly VAT output for taxpayers who are exporters or registered as an investment enterprise
- For other taxpayers, they must have an excess VAT input credit for three or more consecutive months
- Taxpayers must have proof of the VAT input
- Must have proof of the exported goods and services that are subjected to zero-rated VAT
- Must have valid VAT accounting books, sales and purchase journals and other supporting documents
Procedures for VAT refund
The following is the process to request a VAT refund:
- The taxpayer submits the request letter and application form to the GDT, which the GDT will enter the request letter and application form into a document tracking system. This will generate a bar code in order to track the status.
- The GDT will conduct a VAT audit. Companies with the gold status are exempt from VAT audits.
- The GDT will then obtain approval for the refund from the Ministry of Economy and Finance and the General Department of National Treasury.
- Upon approval, the GDT will issue a response letter to the taxpayer together with a refund check.
It may take approximately 40 working days for the GDT to issue a refund check after receiving the VAT refund request.
How to obtain gold status?
The gold status is a classification of the taxpayer’s compliance. According to article 4 of the Prakas on classification of taxes-compliance, there are three types of classifications: gold (highly compliant), silver (moderately compliant) and bronze (slightly compliant), and the level of classification will depend on the total scores of the following criteria:
| Criteria | Score |
| Tax registration and registration update | 1 |
| Submit declaration on time | 1 |
| Tax paid on time as declared | 1 |
| Give notice about any changes in the registration information | 1 |
| Maintained accounting report and other documents as needed | 2 |
| Issued the correct invoices on every transaction according to the Law of Taxation | 2 |
| Not commit any negligence as stated in article 125 of the Law on Taxation | 2 |
| Not commit any serious negligence as stated in article 126 of the Law on Taxation | 2 |
| Paid for taxes, additional tax and other interest as required by the tax administration | 2 |
| Not providing false documents, records or information | 2 |
| Cooperating and allowing tax administrations to inspect account reports or other documents | 2 |
| No findings on issues of transfer pricing between relevant parties | 2 |
| Total | 20 |
Taxpayers will be classified as gold, silver or bronze based on the following scores:
- Gold: 16 to 20
- Silver: 11 to 15
- Bronze 1 to 10
The GDT will issue a tax compliance certificate which is valid for two years to the gold taxpayers. Silver and bronze taxpayers are required to apply for the certificate.
Conclusion
The standard rate for VAT in Cambodia is 10%, but zero-rated VAT can be claimed if you meet the requirements. It is necessary that you file and pay VAT with the GDT by the monthly deadline to avoid any fines.
Feel free to reach out to Acclime if you have any queries on VAT in Cambodia or need assistance with your monthly compliance.
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