Asia Insurance (Cambodia)

The provisions for the tax on salary as stated in the Finance Act of 1995 promulgated by the Royal Kram No. 11NS94 dated 31 December 1994 shall be amended as follows for the benefit of the State Budget.

The tax on salary is a monthly tax imposed on salary that has been received within the framework of fulfilling employment activities

A physical person resident in the Kingdom of Cambodia is liable to the tax on salary for Cambodian source salary and foreign source salary.

A non-resident physical person is liable to the tax on salary for Cambodian source salary.

1. The term “resident” when used for an employee, taxpayer, or physical person means domiciled in, or having a principal place of abode in, the Kingdom of Cambodia, or present in the Kingdom of Cambodia on more than 182 days in the calendar year.

3. Except for contrary provisions, any reference to the terms employee, taxpayer, and physical person are references to both residents and non-residents as defined in this article.

4. The term “employer” includes any government institution, any resident legal person, any resident pass-through, any permanent establishment in the Kingdom of Cambodia, any non-profit organization, or any resident physical person carrying on a business.

5. The term “employee” means any physical person receiving salary from their employment activity including any governmental officer, any elected official and the officer or director of an enterprise.

6. The term “Cambodian source salary” means salary received within the framework of fulfilling employment activities in the Kingdom of Cambodia. As for the salary received by a non-resident for furnishing technical assistance it shall be treated as from sources in the country where the payor of such income resides.

b. for the determination of the source of income, means outside of the Kingdom of Cambodia.

8. The term “salary” means remunerations, wages, bonuses, and overtime, compensations and fringe benefits which are paid to an employee, or which are paid for the direct or indirect advantage of the employee for the fulfillment of employment activities.

The tax exemption for the salary of diplomatic and foreign officials shall be as follows:

a. Salaries that officers and employees of a diplomatic or consular mission of a foreign government holding a diplomatic or official passport of that government have received within the framework of fulfilling their official function in the Kingdom of Cambodia.

b. Salaries that foreign representatives, officials and employees of international organizations and of agencies of technical cooperation of other governments have received within the framework of fulfilling their official function in the Kingdom of Cambodia.

2. Any tax exemption in this article shall be based on the principle of reciprocity between the governments concerned.

1. Real refunds on professional expenses made by the employee under the assignment and for the benefit of the employer and which satisfy the 3 following conditions:

c. supported by detailed invoices already paid and made in the name of the recipient of the real expense refund.

3. Additional remuneration with social characteristics where there is provision in Labor Law.

4. Supply gratis or below acquisition cost of special uniforms or professional equipment.

5. Flat allowance for mission and travel expenses. This allowance should not overlap the real expense refund provided in this article.

Section 3: Monthly Tax Base, Monthly Taxable Salary and the Determination of the Monthly Tax

Except for fringe benefits taxable under article 48 of this law the monthly tax base for a resident is the taxable salary from which is deducted:

1. withholding obligations as the result of the compliance with the Labor Law in order to create pensions and for the maintenance of social welfare;

c. advance money, loan or installment made by the employer to the employee which shall be added to the taxable salary of the month in which they are paid out and shall be deducted from salary in the month of any repayment made by the employee.

a. minor dependent children at the time of tax payment is allowed a reduction in the tax base of seventy-five thousand Riels per each child per month,

b. spouse having only an occupation as housewife is allowed a reduction in the tax base of seventy-five thousand Riels for one person only per month.

3. For a non-resident taxpayer taxable salary includes salary from Cambodian sources taxable according to the provisions of this chapter.

For a resident employee the tax to be paid must be determined on the monthly taxable salary and must be withheld by the employer according to the progressive rates by tranche as follows:

Taxable Parts of the Monthly Salary	Tax Rate
From 0 to 500,000 Riels	0%
From 500,001 to 1,250,000 Riels	5%
From 1,250,001 to 8,500,000 Riels	10%
From 8,500,001 to 12,500,000 Riels	15%
Over 12,500,000	20%

For fringe benefits, every month, the employer shall withhold and pay tax by the time specified at the rate of 20 percent of the total value of fringe benefits given to all employees. The value of fringe benefits is the fair market value inclusive of all taxes.

Except for fringe benefits to be taxed under article 48 of this law, for a non-resident taxpayer the tax shall be withheld by the payor at the rate of 15 percent on every payment of taxable salary as provided in paragraph 3 of article 46 of this law. This withholding tax is the final tax on salary for the non-resident receiving the salary.

A resident taxpayer who has received foreign source salary and who has paid taxes according to foreign tax law shall receive a tax credit which for deduction from the tax on salary to be paid in the Kingdom of Cambodia under the conditions that there is presentation of documents confirming this payment abroad.

a. In order to calculate the tax to be paid in the Kingdom of Cambodia before deduction of this tax credit, the total amount of salaries received from Cambodian sources and foreign sources shall be taken into account.

b. The tax credit is determined separately for the tax paid by a Cambodian resident in each foreign country. But, the tax credit to be allowed for the tax on salary paid abroad is the smaller of:

· the amount obtained by multiplying the tax on total salaries from all sources for the same period calculated according to the table of progressive tax rates by tranche in article 47 of this law with the ratio of salary received in that foreign country to the total salaries from all sources.

The refund of the foreign tax credit is possible only if the resident taxpayer has complied with the formalities and supplied various documents as specified by the tax administration especially the certification from the employer and from the tax administration of the place of employment abroad.

1. This tax is the debt of the physical person receiving the salary, including foreign physical persons, except for contrary provisions as stated in international agreement.

2. The tax on salary shall be collected through monthly withholding procedure by the employer at the time of each salary payment.

3. If the employer resides abroad, the fiscal representative appointed in the Kingdom of Cambodia by the employer is the one in charge of withholding the tax on salary prior to the salary payment to employees and of transferring their taxes to the State.

4. The employer or the resident representative in the Kingdom of Cambodia of a foreign employer and the employee shall be jointly responsible for the payment of the tax on salary in the Kingdom of Cambodia regardless of whether the salary is paid in the Kingdom of Cambodia or abroad. In the case where no withholding is made on the tax on salary, the employer is held responsible under this law even if the tax is already paid by the employee.

The withholding tax related to the salary payment made in any one month shall be paid by the 15th of the following month to the tax administration in the area of the domicile or principal establishment of the person in charge of withholding the tax.

2. reporting to the tax administration and the employee of the status of the tax withheld;

3. keeping and maintaining books and records which shall be determined by prakas of the Ministry of Economy and Finance.

From 1 January 1998 onward, shall be established a Tax on Value Added on taxable supplies for the benefit of the State budget.

2. The term “service” means the provisions of something of value other than goods, land, or money.

3. The term “supply of a good” means the transfer of the right to use or dispose of a good as the owner whether or not for consideration. The supply of a service incidental to the supply of a good shall be considered a supply of a good.

4. The term “supply of a service” means a supply that is not a supply of a good or land or money which is made for consideration. The supply of a good incidental to the supply of a service shall be considered a supply of a service.

5. The term “person” means any person or group of persons engaged in business and any other person who is related to the person.

a. a person who owns 20 percent of more in value or voting power in equity interests in the person under consideration;

c. a member of the family or spouse or a member of the family of the spouse of the person;

d. purchasing 30 percent or more of the person’s total output in any three consecutive month period.

2. Hospital, clinic, medical, and dental services and the sale of medical and dental goods incidental to the performance of such services.

3. The service of transportation of passengers by a wholly state owned public transportation system.

5. Primary financial services which shall be determined by prakas of the Ministry of Economy and Finance.

6. The importation of articles for personal use that are exempt from customs duties and that are within the value level which shall be determined by prakas of the Ministry of Economy and Finance.

7. 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 shall be as follows:

1. The imports of goods for or by foreign diplomatic and consular missions, international organizations and agencies of technical cooperation of other governments for use in the exercise of their official function shall be treated as non taxable supplies. Non taxable supplies shall only be allowed on the certification by the chief of mission to the Tax Department that the goods are being imported for purpose of the use as above.

2. The import of goods for the personal use of the official personnel of missions and organizations as stated in paragraph 1 of this article shall be treated as non taxable supplies only for those items that are on an enumerated list which shall be determined by prakas of the Ministry of Economy and Finance.

3. The non taxable supplies in this article shall be based on the principle of reciprocity between governments concerned.

The taxable person refers to any person subject to the real regime system of taxation who makes a taxable supply as stated in article 60 of this law.

A person subject to the simplified regime system of taxation may apply to be classified as a taxable person. The conditions and procedures for this application shall be determined by prakas of the Ministry of Economy and Finance.

For the purpose of this chapter, an employee shall not be treated as a taxable person with respect to activities engaged in as an employee.

Except for contrary provisions in this chapter, the term “taxable supply” means:

1. the supply of goods or services by a taxable person in the Kingdom of Cambodia;

3. the making of a gift or supply at below cost of goods or services by the taxable person;

The rules and procedures for the application of this article shall be provided in sub-decree.

1. The taxable value for any supply shall be the price of the goods or services the seller charged the purchaser. The taxable value includes any charges for transportation and other items payable to the seller with respect to the supply, including any specific tax on certain merchandise and services but excluding the tax on value added. Procedures for the adjustment of the taxable value at the time of supply and after the time of supply shall be determined by sub-decree.

2. When the payment for a taxable supply involves any consideration other than money for the direct or indirect benefit of the seller, this consideration shall be included in the taxable value at its fair market value.

3. The taxable value for any imported good shall be the customs value including insurance and freight plus any customs duties and any specific tax on certain merchandise and services. If there is no such adjusted customs value, the fair market value shall be used.

4. If the taxable value of the goods or services supplied does not represent the true value, the tax administration may determine a value for such goods or services and such value shall be presumed to be the correct value until proven otherwise to the satisfaction of the tax administration.

5. The taxable value of used goods that the taxable person regularly purchases from consumers for resale or sells on behalf of other persons shall be the differential between the selling price and the purchase price, or the commission from the sale of those goods.

2. The time of supply of goods and services shall be the time by which the seller must issue the invoice or the time the seller issues the invoice if that invoice is issued before the time it must be issued by the seller.

3. A value added tax invoice must be issued within seven days after the goods are shipped or services rendered or after payment if payment occurs before the goods are shipped or services rendered. If a shipment is not accompanied by an invoice, there shall be attached a shipping document which has been properly recorded in the shipping journal.

4. For the supply of goods or services which are made continuously or which involve multiple payments, the time of supply shall be determined by prakas of the Ministry of Economy and Finance.

5. In the case of the import of goods, the time of supply shall be the time the importer files a declaration to the customs administration according to the regulations in force.

1. The supply of a good takes place in the Kingdom of Cambodia if the good is delivered in the Kingdom of Cambodia, whether that delivery takes on the characteristic of a transfer of the right to use or to dispose. In the case where the supply must include transportation, the supply takes place in the Kingdom of Cambodia if the good is in the Kingdom of Cambodia when the transportation starts.

2. The supply of a service takes place in the Kingdom of Cambodia if the service is performed in the Kingdom of Cambodia, except that:

a. the supply of a service in connection with immovable property is deemed to take place where the property is located;

b. the supply of a service in connection with transport is deemed to take place where the transport occurs.

3. Goods are imported into the Kingdom of Cambodia if they are brought within the customs territory of the Kingdom of Cambodia.

1. The tax on value added shall be imposed at the tax rate of 10 percent on the taxable value of each taxable supply in the Kingdom of Cambodia.

2. The tax on value added shall be imposed at the tax rate of 0 percent on the taxable value of each taxable supply of goods exported from the Kingdom of Cambodia and of the taxable supply of a service rendered outside of the Kingdom of Cambodia as stated in article 63 of this law.

3. The tax administration may use a number of documents to certify that export has in fact occurred including export certification from the Customs Department, import documents from the country of import, executed letters of credit, and payments received by a domestic bank.

The input tax credit and the non taxable supplies shall be determined as follows:

1. The tax paid by a taxable person on goods and services for use in the business which are supplied by another taxable person or the tax paid by the taxable person as an importer on imported goods or services for use in his own business shall become an input tax credit deductible against the output tax. Input means any goods or services purchased and output means any goods or services sold.

2. In the case where goods and services purchased are used partly for taxable supplies and partly for non taxable supplies, the tax credit shall be allowed only for that portion used for taxable supplies.

1. The tax charged under article 64 of this law shall become a debt to the State at the time of supply.

2. The tax to be paid to the State is equal to the total output tax according to the rates in article 64 of this law minus the total input tax credit allowed for the same month.

If a capital asset for which a tax credit has been received under article 65 of this law ceases to be used in the business of the taxable person, such asset shall be treated as sold and taxable for its then fair market value at the time of cessation of use.

1. a value added tax invoice, drawn up in accordance with article 78 of this law,

2. a customs Bill of Entry for Import, certified by customs authorities, which must state the name of the taxable person as consignee or importer and the amount of tax paid at the time of import.

The input tax that shall not be allowed as a tax credit includes the tax paid by a taxable person on entertainment, amusement, or recreation expenses; the purchase of automobiles; or the purchase of certain petroleum products.