Official exchange rate usage for a real regime taxpayer: Updated.
The Cambodian government issued Instruction no. 26118.GDT on 28 October 2022 addressing the official exchange rate.
Previously, the taxpayers were required to use the exchange rates issued by the National Bank of Cambodia (NBC) to convert amounts in US$ to KHR on their invoices. However, the exchange rates issued by the NBC did not accurately reflect the market rate, so in many cases, taxpayers lost on exchange rate movements when receiving payment in KHR. To avoid such losses, some taxpayers have not allowed their clients to make payments in KHR.
To address this issue, the General Department of Taxation (GDT) has issued its own exchange rates for tax purposes based on the Instruction no. 10360 GDT dated 17 May 2022.
Subsequently, NBC changed its official exchange rate determination which now reflects the actual market rate. So, as outlined in Instruction no. 26118.GDT dated 28 October 2022, the GDT decided to re-use the exchange rate issued by the NBC to convert amounts in US$ to KHR in invoices.
The exchange rate usage in this Instruction no. 26118.GDT is the same as Instruction no. 10360. We have summarised key points for official exchange rate usage in the below table.
| No. | Official exchange rates | Usage | Remark |
| 1. | Daily exchange rate or the market exchange rate (the market exchange rate should NOT be lower than rates issued by the NBC) | Daily supply | If it is fallen on a day off or before the official exchange rate is issued, use the exchange rate issued one day before the day-off |
| 2. | 15th of the month | Salary and Fringe Benefit Items | If it is fallen on a day off, use the exchange rate issued one day before the day off. |
| 3. | End of month | Invoices from a non-resident or non-real regime resident persons | |
| 4 | End of year | Annual Tax on Income |
This Instruction no. 26118.GDT is effective from the signature date onwards, 28 October 2022 and the Instruction no. 10362 GDT dated 17 May 2022 is nullified.
Our comments
- To re-use the exchange rate issued by the NBC is effective from 28 October 2022 onwards, then how should the exchange rates for October 2022 monthly tax returns be used? We would think that exchange rate for “Salary and Fringe Benefit” items should follow the rate (15 October 2022) issued by the GDT. For all other tax items apart from Tax on Salary and Fringe Benefits Tax, the average exchange rate (31 October 2022) should follow the rate issued by the NBC.
- To avoid loss on exchange rate movement, as indicated above, some taxpayers may not allow their client to make payment in KHR. The additional tax provision to allow a taxpayer to use market exchange rate, which is not lower than rate issued by the NBC, provides flexibility for a taxpayer to avoid loss from exchange rate movement. However, it is subject to further clarification with the GDT which market rate (1USD=4,200KHR?) is acceptable by the GDT? We will provide you further update on this matter separately if needed.
- We have experienced in practice that the GDT allows some taxpayers to use the last day of the last month’s exchange rate as the rate for the whole of next month. If the exchange rate does not impact much on your Entity, for ease of invoice issuance, you may consider a request to the GDT to use the last day of the last month’s exchange rate as the rate for the whole next month.
Should you require further clarification or wish to discuss the above matters in more detail, please do not hesitate to contact us.
Seng Pov (Mr.)
Head of Tax
s.***@ac*****.com
m: +855 (0) 12 533 432
t: +855 (0) 23 21 59 60
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