Prior to the issue of this Instruction, a taxpayer was required to use the exchange rates issued by the National Bank of Cambodia (NBC) to convert amounts in US$ to KHR on their invoices. For example, a daily exchange rate would be used for daily sales or the exchange rate on the 15th of the month would be used for salary and fringe benefit items. This is required as the KHR amount on an invoice is the official currency for the tax declaration.
However, it was the case that some taxpayers lost on exchange rate movements when receiving payment in KHR as clients will pay in KHR when there is a different exchange rate. To avoid such losses, some taxpayers may not allow their clients to make payments in KHR.
Therefore, to have the exchange rate in line with the market rate and to avoid such above issues, the General Department of Taxation (GDT) decided to issue its own exchange rate for tax invoice issuance which is effective from 01 June 2022 onwards based on the Instruction no. 10362.GDT dated 17 May 2022.
We have compared the official exchange rates on 01, 02, and 03 June 2022 issued by the GDT and NBC in the below table for your reference:
|01 June 2022||US$1=KHR4,099||US$1=KHR4,061|
|02 June 2022||US$1=KHR4,098||US$1=KHR4,061|
|03 June 2022||US$1=KHR4,097||US$1=KHR4,061|
Based on Instruction no. 10362.GDT dated 17 May 2022, we have summarised key points for official exchange rate usage in the below table:
|No.||Official exchange rates||Usage||Remark|
|1.||Daily||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||Invoice from a non-resident or non-real regime resident persons|
|4.||End of year||Annual Tax on Income|
It is noted from the daily exchange rate provision that “If the supply is made on day-off or before the GDT issues the official exchange rate, a taxpayer shall use exchange rate issued by the GDT one day before day-off”. From this provision, it seems that there will be two exchange rates used in one day for a taxpayer (e.g. food and beverage industries) that has supply before the GDT issues the official exchange rate.
A schedule to issue a daily official exchange rate is not defined and it is not disclosed on the GDT’s website the time when the exchange rate is uploaded. Hence, it seems to us that it is impractical to implement such a daily exchange rate provision, especially for the food and beverage industries. We would think that the GDT should set a schedule to issue the daily exchange rate. If the exchange rate is not issued in a timely manner, a taxpayer should be able to use the previous day’s exchange rate or the GDT should offer flexibility for a taxpayer to implement the daily exchange rate; there is no material impact between one-day exchange rate to another.
In addition, we have experienced in practice that some taxpayers are allowed to use the last day of the last month’s exchange rate as the rate for the whole next month. Based on Instruction no. 10362.GDT above, all used rules and procedures related to exchange rate seem to be voided. In this case, is the approval to use the last day of the last month’s exchange rate as the rate for the whole next month still valid? We would think that it should be still valid.
If the exchange rate does not have an impact 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 as indicated above.
Should you require further clarification or wish to discuss the above matters in more detail, please do not hesitate to contact us.
Mr. Seng Pov
Head of Tax Division
M: +855 (0) 12 533 432
T: +855 (0) 23 21 59 60
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