Law on Taxation

Chapter 1 | chapter 2 | chapter 3 | chapter 4 | chapter 5 | chapter 6

Section 4: Payment of Tax

Article 70: The Monthly Filing of the Value Added Tax Declaration
The value added tax declaration for any month shall be submitted to the tax administration on or before the 20th day of the following month and the tax shall be paid according to the amount declared at the time the declaration is filed.

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Article 71:  Treatment of Excess Credits
If the input tax paid by the taxable person under article 64 of this law exceeds the output tax collected by that person for any month:

1. the excess shall be used as a tax credit against any outstanding liability of such person for the tax on value added for prior months,

2. the remainder of the excess shall be treated as an input tax credit under article 65 of this law for the succeeding month.

Article 72: Refunds for Exporters
The tax administration may refund the monthly excess input tax credits according to the request of the taxable person who has as a primary activity export if that person has shown proper certification of exports and has complied correctly with his obligations in book and other record keeping.
 
Article 73: Refunds Where Excess Credits Continue for Three Months or More
If the taxable person has excess input tax credits for three months or more that person may apply for a refund of the tax at the end of the third month or in any month thereafter. To be effective for any month, the request must be filed in a period of 20 days after the close of such month.
 
Article 74: Refunds to Diplomatic Missions and International Organizations
Foreign diplomatic and consular missions, international organizations and agencies of technical cooperation of other governments may apply for a refund of the tax on those goods purchased locally that are listed on an enumerated list which shall be determined by prakas of the Ministry of Economy and Finance. The refund shall be granted only on the certification by the chief of mission to the tax administration that the goods are being bought for use in the exercise of the official function of the relevant unit.

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 Article 75: Liability for the Collection and Payment of Tax
The liability for the collection and payment of tax is as follows:

1. A taxable person or importer has the obligation to pay the tax imposed by article 64 of this law with respect to every taxable supply in which the taxable person or importer engages.

2. Special conditions for the liability of the purchaser for the tax where the supplier is not engaged in business in the Kingdom of Cambodia or where there are other obstacles to the collection of the tax from the supplier shall be provided by sub-decree.

3. Any person making a supply of goods and services on behalf of the owner, other than as an employee, and having control of the supply shall be treated as a taxable person with respect to that supply.

Section 5: Administrative Provisions

Article 76: Registration
The principles of registration shall be as follows

1. A taxable person as stated in article 59 of this law must complete registration for the tax on value added within a period of 30 days of the day on which the person becomes a taxable person. The rules and procedures for registration shall be determined by sub-decree.

2. Where a person required to register fails to register the tax administration may register that person from the time that the person should have been registered. The person so registered shall be liable for all tax in article 64 of this law from the date person should have been registered.

3. Where a taxable person registered under this article expects not to be classified as a taxable person for the current and succeeding year, such person may apply for de-registration.

4. For a group of two or more related persons where one or more of those persons is not a taxable person the tax administration may treat a taxable person as registered in respect to all or part of the related economic activities. Where none of the related persons is a taxable person the tax administration may register one or more of those persons of the group in respect to all or part of the related economic activities.

5. For registration purposes and with the approval of the tax administration, for a group of taxable persons who are related as defined in article 56 of this law, the activities of various members of the group may be treated as the activities of one designated member. In any such case, each member of the group must undertake to be jointly and severally liable for compliance with the provisions of this chapter.

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Article 77: Value Added Tax Invoice
The principles for the value added tax invoice shall be as follows:

1. Any taxable person who makes a supply shall provide the purchaser a serially numbered Value Added Tax Invoice.

2. The invoice required by paragraph 1 of this article with respect to any supply shall have the title of “Value Added Tax Invoice” and shall contain the following:
   a. the name and registration number of the seller,
   b. the date of issue of the invoice,
   c. the name of the purchaser or purchaser's employee or agent,
   d. the quantity, description and selling price of the goods or services,
   e. the total value excluding the specific tax on certain merchandise and services and the tax on value added,
   f. the total taxable value if different from the amount in subparagraph e of this paragraph,
   g. the amount of the tax payable,
   h. the date of supply of the goods or services if different from the date of issue of the invoice.

3. A person cannot issue any invoice or other document indicating an amount which claims to be tax on the supply of any goods or services unless such person is a taxable person registered according to article 77 of this law, and the goods or services supplied are taxable goods or services.

4. Without prejudice to any other penalties, where any invoice falsely claims to be a Value Added Tax Invoice and shows that an amount of tax is payable, the person issuing such invoice shall pay to the tax administration within seven days of the date of issue of the invoice any amount shown on the invoice whether or not such tax amount would otherwise be properly payable.

5. In the case of sales at retail where most sales are not to a taxable person the invoice as required in paragraph 1 of this article shall be considered satisfied if the seller has provided a detailed cash register receipt or other documentation which shall be determined by sub-decree.

6. In the case of an import, the customs Bill of Entry properly filled and containing certification of the payment of the tax shall be used as the control document for establishing eligibility for a tax credit.

Article 78: Failure to Issue Value Added Tax Invoice
The failure to issue value added tax invoices shall be subject to penalties as follows:

1. Without prejudice to any other penalties, if the tax administration can find for a second time that an establishment of the a taxable person has failed to issue the required invoice, the tax administration may lock and seal the establishment for a specified period not to exceed 7 days.

2. If any establishment which has been closed under paragraph 1 of this article, has committed again such an offense, such establishment may again be closed for a specified period not to exceed 7 days. 

Article 79: Books, Records, and Information
The principles for the books, records, and information for the tax on value added shall be as follows:

1. For the purposes of the provisions in this chapter the taxable person shall keep copies of all invoices issued and all invoices received.

2. The taxable person shall properly record and preserve books and records of every transaction made together with an account showing the amounts of tax collected on his sales and the amount of tax paid on his purchases and any adjustment to sales value or tax amount in a manner prescribed by the tax administration.

3. The works referred to in paragraph 2 of this article shall be maintained daily and totaled at the end of each month and a balance struck. The taxable person shall prepare monthly a Value Added Tax Statement in the manner prescribed by the tax administration. 

4. The invoices, records and any other document relating to the tax shall be kept in chronological order in a manner and at the place prescribed by the tax administration for a period of at least 10 years after the completion of the last transaction to which they pertain.

5. All documents and records required to be kept under this article and any other documents and records pertaining to the business of the person shall be made available for inspection by tax administration on demand.

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Article 80: Special Rules for Imports
The provisions of this chapter pertaining to imports shall be administered by the Customs Department in a manner as provided by sub-decree.

Article 81: Cessation of Business
The rules for the cessation of business shall be as follows:

1. Within 10 days upon ceasing to carry on the business for which the taxable person is registered that person shall submit to the tax administration a declaration on the prescribed form to which is attached detailed information on sales and purchases since the last tax declaration and provide details on all goods in stock on which tax has not been paid or on which a tax credit has been received and shall pay any tax due.

2. The rules and procedures for winding up the business, for de-registration, and the responsibilities of a legal representative shall be determined by sub-decree.
   

Article 82: Transfer of Business
The transfer of a business from one person to another person, in accordance with the conditions to be provided by sub-decree, shall not be subject to the tax on value added. The rule and procedures for the notification of transfer, the registration of the person acquiring the business, the responsibility of the person transferring the business, the responsibility of the person acquiring the business, and the preservation of records shall be determined by sub-decree.
 
Article 83: Contracts Entered Into Before the Effective Date of this Tax
The principles governing contracts entered into before the effective date of this tax shall be as follows:

1. The tax imposed by article 55 of this law shall apply to taxable supplies under contracts entered into before the effective date of this tax, if such supplies take place on or after such date.

2. In the case of any taxable supply described in paragraph 1 of this article, any value added tax recorded outside the contract shall be treated as additional consideration for the goods or services purchased and as a legal obligation of the purchaser to the seller.

Article 84: Tax Credit for Stocks of Goods
The tax credit for stocks of goods shall be determined as follows:

1. Where a person is newly registered and on the date of registration has stocks on which the tax on value added or the Tax on Turnover has previously been paid, that person may apply to be allowed, by the tax administration, a tax credit for the tax paid on that stock after the tax administration has verified that any invoices or the copies of the bills of entry for those goods are correct. 

2. If satisfied to the correctness of such documents, the tax administration may authorize a tax credit for those supplies made within 60 days prior to the date of registration or the effective date of this law. Such a credit can be taken in one or more declarations for this tax subject to such conditions as the tax administration may impose.

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Chapter 4
Amendments to the Finance Act of 1994 and to the Amendments to the Finance
Act of 1995

Section 1: Provisions for the change of the Specific Tax on Certain Merchandise to the Specific Tax on Certain Merchandise and Services

Article 85:
From the date of the promulgation of this law the Specific Tax on Certain Merchandise of the amendment to the Finance Act of 1995 promulgated by the Royal Kram No CS/RKM/0995/01 dated 01 September 1995 shall be called the “Specific Tax on Certain Merchandise and Services” and a number of articles shall be amended as stated in this chapter. Article 18 of the above mentioned law shall be changed as follows:

• 30 percent for automobiles classified under the harmonized tariff heading 8703 with an engine displacement of more that 2000 cc. and spare parts for those automobiles;

• 20 percent for petroleum products and automobiles classified under the harmonized tariff heading 8703 with an engine displacement of up to 2000 cc. and spare parts for those automobiles;

• 10 percent for all types of beverages and tobacco products, hotel and other entertainment services, and all types of motor vehicles and spare parts classified under the harmonized tariff headings 8702, 8704.21 through 8704.90, 8706, 8708, 8714, and 8711 with engine displacements from 125 cc. upwards.

2 percent for the domestic sale of tickets for the transport by air of passengers from inside of the Kingdom Cambodia to abroad, and telecommunication services from inside the Kingdom of Cambodia to abroad. 

The phrase “the sales price recorded on invoice” in paragraph 2 of article 21 of the above mentioned law shall be changed to “the ex-factory sales price recorded on invoice”. Add the paragraph as below to article 21 of the above mentioned law: “for services supplied in the Kingdom of Cambodia, the invoice price of the service supplied.” The phrase “concerning merchandise produced” in paragraph 2 of article 22 of the above mentioned law shall be changed to “concerning merchandise produced and services supplied”. 

Add the paragraph as below to article 23 of the above mentioned law: "the supplier for services supplied in the Kingdom of Cambodia.” 

Add the paragraph as below to article 24 of the above mentioned law: “For telecommunication and transport services in the Kingdom of Cambodia a separate register containing the date and value of services supplied from points inside of the Kingdom of Cambodia to points outside of the Kingdom of Cambodia.” 

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Section 2: Provisions for the Change of the Tax on Turnover

Article 86:
The Tax on Turnover as stated in the Finance Act of 1994 promulgated by the Royal Kram No 02NS dated 28 December 1993 shall be changed as follows.

1. Delete paragraph 2 of article 39 of the above mentioned law.  

2. The phrase “value out of customs.” in article 46 of the above mentioned law shall be changed to “value inclusive of customs duty and the specific tax on certain merchandise and services.”

3. Add the paragraph as below to article 47 of the above mentioned law:
   “The Tax Department may collect consumption tax and apply penalties on any good being offered for sale within the territory of the Kingdom of Cambodia for which the seller cannot provide adequate documentation that the consumption tax was paid at the time of import.”

4. Add the paragraph e. as below to article 49 of the above mentioned law:

• “From 1 July 1997 all taxpayers shall:· use the time of supply rule as stated in article 62 of this law which provides for the tax on value added to determine the date on which tax becomes a debt of the taxpayer towards the State.

• issue invoices in accordance with the rules and procedures as stated in articles 63 of this law which provides for the tax on value added;

• be considered as having obstructed the implementation of tax provisions and subject to penalties under article 133 of this law in the case of non-compliance with article 49 paragraph e.” 

5. To the Amendments to the Finance Act of 1995, shall be added one paragraph to article 33: “From 1 January 1998: 

• taxpayers under the real regime system of taxation shall not be subject to the tax on turnover;

• taxpayers under the other regime systems of taxation shall be subject to the tax on turnover rate at the of 2 percent;

• articles 44, 45, 46, 47, and 48 of the Finance Act of 1994 and article 37 of the Finance Act of 1995 are repealed.”

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Chapter 5
Provisions on Tax Rules and Procedures

Section 1: General Provisions

Article 87: Object
By the provisions of this chapter there shall be establish the rights and obligations of the taxpayer and the tax administration, procedures for the review of tax paid, procedures for resolving disputes, tax penalties.
The provisions of this chapter apply to all taxes unless a specific tax provides otherwise.
 
Article 88: Definitions
For the purpose of this chapter:

1. The term “tax” means any direct or indirect tax.

2. The term “person” means a physical person or a legal person.

3. The term “taxpayer” means a person obligated to pay tax.

4. The term “tax administration” means the organization of the Tax Department. 

5. The term “tax declaration” means documents that tax provisions require a taxpayer or withholding agent to fill in under the conditions as stated in this law. 

6. The term “withholding agent” means the person that tax provisions require to withhold and to pay taxes to the budget on behalf of the third person. 

7. The term “economic activity” means the regular or continuous or from time to time activity of a person whether or not for profit in the supply of or intent to supply goods or services to other persons for the purpose of obtaining a benefit.

Article 89: International Treaties
Provisions of international treaties related to taxation which have been ratified by the National Assembly shall take precedence over provisions of this law.

Article 90: Language Used in Tax Declarations and Tax Documents
All tax declarations as well as documents and correspondences necessary for tax assessment, tax collection and enforcement of tax law or involved in other procedures in the determination of tax shall be made in Khmer language.

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Section 2: Rights and Obligations
 
Article 91: Rights and Obligations of the Taxpayer
The rights and obligations of the taxpayer shall be as follows:

1. The taxpayer has the rights as follows:
    
   a. to be considered as confidential and used only for the purposes specified in tax provisions all information related to his activities which are provided to the tax administration as stated in article 94 of this law;
    
   b. to regularly receive information concerning the process of tax system and procedure in tax assessment as stated in articles 96 and 118 of this law;
    
   c. to receive information about one’s own rights including the rights to appeal as stated in articles 118 and 122 of this law;
   
   d. to appeal as stated in this law to every decision made by the tax administration as stated in articles 118 and 122 of this law;
    
   e. to pay no more tax than what is required by tax provisions as stated in article 107 of this law.
   

2. The taxpayer has the obligations as follows:
   
   a. to register with the tax administration as stated in article 101 of the law;
    
   b. to submit the tax declaration and provide information as required by tax provisions as stated articles 98 and 104 of this law;
    
   c. to pay taxes according to the schedule as stated in tax provisions;
    
   d. to maintain books of account, supporting documents, and other documents and to show them to the tax administration as stated in tax provisions and article 98 of this law;
   
   e. to present oneself to the tax administration according to the date as stated in the letter of notification of the tax administration as stated in article 99 of this law;
    
   f. to pay various taxes, additional taxes, and interest as determined by the tax administration according to the date as stated in the tax provisions or as notified by the tax administration in writing as stated in tax provisions and articles 107, 130, 131, and 132 of this law.

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Article 92: Powers and Obligations of the Tax Administration
The power of the tax administration includes the following :

1. to assess the tax base of the taxpayer or the withholding agent as stated in articles 116 and 117 of this law;

2. to request the presence of the taxpayer or the withholding agent as stated in article 99 of this law;

3. to determine the necessary books, documents, and supporting documents that the taxpayer or the withholding agent must maintain and provide to the tax administration as stated in articles 98 and 100 of this law;

4. to require the taxpayer or third person to provide information related to the taxpayer or withholding agent as stated in article 99 of this law;

5. to enter the residence or the business establishment of the taxpayer, the withholding agent, or a third person to obtain information related to the taxpayer or the withholding agent as stated in article 100 of this law;

6. to receive from state institutions information concerning or related to the taxpayer or the withholding agent as stated in article 116 of this law; 

7. to apply recovery measures to the taxpayer or the withholding agent when the person fails to pay various taxes, additional taxes, and interest as required by this law as stated in articles 109 through 115 of this law;

8. to predetermine transactions between related taxpayers as stated in tax provisions.

The tax administration has the obligations as follows:  

1. to collect taxes, additional taxes and interest as stated in article 93 of this law;

2. to maintain confidentiality of information that the taxpayer or a third person has provided and communicate this information only to the person as determined by tax provisions as stated in articles 94, 128 and 138 of this law;

3. to provide information to the taxpayer or to the withholding agent to ensure proper implementation of tax provisions as stated in article 96 of this law;

4. to refund or credit overpaid taxes as stated in tax provisions;

5. to provide a letter of notification for tax assessment to the taxpayer or to the withholding agent as stated in articles 116 through 118 of this law;

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Section 3: Tax Administration

Article 93: Responsibility for Tax Administration
The institutions responsible for the administration of tax provisions are as below:

• the Tax Department of the Ministry of Economy and Finance;
  other institutions of the Royal Government which tax provisions have empowered.

The tax administration has the obligation to collect taxes and apply penalties as determined by tax provisions and to appeal to the court in the case of violations of law.

Article 94: Confidentiality of Tax Information
The tax administration and every person who is or has been official and agent of the tax administration must keep confidential the information pertaining to the taxpayer that they have received during their official performance of their duty and can provide the information only to the person that this article allows.
 
The official and the agent of the tax administration can provide information related to the taxpayer only to:

1. an official and other agent of the tax administration at the time and for the purpose of carrying out the duties according to the tax provisions;

2. the criminal authority for the purpose of laying charges for tax violations;

3. the court in the stage of ruling in order to assess the tax of the taxpayer that must be paid or the responsibility for the violation of the tax provisions;

4. the tax authority of another country in accordance with the international agreement.

The person who receives information from another who is authorized to provide the information as stated in paragraph 2 of this article must keep the confidentiality of that information as determined in this article except for a minimum level for which it is necessary to provide the information.
 
The information related to the taxpayer can be provided to another person if there is written accord from the taxpayer.

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Article 95: Delivery of Information to the Taxpayer
A letter or notification that the tax administration provides to the taxpayer shall impose an obligation on the taxpayer to the tax administration only when that letter or notification is made in written form and is delivered to the taxpayer.
 
When the tax provisions require the tax administration to notify a person in writing, that letter of notification shall be considered as correctly delivered only if that letter has been delivered directly to that person or sent by registered mail to the legal address of that person.
 
The date of a notification or other documents is the date of direct delivery to the person. In the case where the letter of notification is sent by registered mail the date of notification is the date of the stamp on the registered letter of bureau of post from which the registered letter is received by the taxpayer.
 
The letter of notification shall be considered correctly delivered and received if the conditions of paragraph 2 of this article are satisfied even if the person so notified refuses direct delivery or to accept registered mail.

Where the address of a person has changed and the person has failed to notify the tax administration of the change, the letter of notification sent to the last known address shall be considered correctly delivered and received.
 
Article 96: Publicity and Explanation of Tax Law
The Tax Administration must prepare short explanatory booklets about the important contents of each tax.
 
For a tax that the tax administration determines as advisable to explain and to guide, the local tax officials must arrange to educate those taxpayers so that they understand their obligations and rights.
 
Article 97: Incentives for the Efficient and Effective Collection of Tax
The Ministry of Economy and Finance shall establish an incentive system for officials and agents of the tax administration. The procedures for the operation of the incentive system shall be determined by prakas.
 
Article 98: The Keeping of Financial and other Supporting Documents
The taxpayer must keep books of account, supporting documents, and other financial documents as determined by the tax provisions and must submit these books and documents to the tax administration for inspection when requested.
 
As to the taxpayer who has no obligation to keep books of account according to the General Chart of Accounts of the Kingdom of Cambodia, he must keep a journal with chronological recording of all income and expenses pertaining to the business in line with a form prescribed by tax administration.
 
The person who must keep books of account, documents, or journals that are prescribed by the tax provisions or other provisions, must preserve these books or documents for a period of 10 years starting from the end of the tax year.
 
An invoice shall be issued for every transaction between the taxpayer and another person. The rules and the content of the invoice shall be determined by sub-decree.
 
The taxpayer shall correctly record the details of the invoice in the journals of account.
 
Article 99: Right to Receive Information
For the purpose of determining the tax that any person must pay or for the purpose of collecting taxes, the tax administration can issue a letter of notification to the taxpayer or a third person:

• to provide information related to the taxpayer as stated in the letter of notification such as information on suppliers, clients, or bank accounts;

• to present oneself at the time and place designated in the letter of notification for the purpose of showing or providing information, documents, or data that are in the possession of the person and that are clearly stated in the letter of notification.

In addition to the information required as stated in paragraph 1 of this article, the letter of notification must contain the name and the identification number of the taxpayer (if available) and the signature of the tax administration issuing the letter of notification.

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Article 100: Power of Investigation (without an advanced letter of notification)
For each inquiry for which a letter of mission is issued, the tax administration has the right to enter the business establishment, the place that is considered to be the business establishment, the place that is open to the public, or other places for the purpose of assessing the tax of any person that must be paid or for the purpose of collecting taxes:
 
during the business hours;  
any time according to the condition and reasons stated in the warrant issued by a judge. 
The tax administration that has entered legally the place as stated in paragraph 1 of this article can: 
compile or copy documents that are in that place; 
confiscate documents or other evidence that can become information for assessing the tax of a person that must be paid;

• install different control instruments or seal goods if they are related to any application of tax;

• inventory assets, raw materials, work in progress, finished products, and all other stock.

The tax administration can request a banking institution in the Kingdom of Cambodia to provide information about the taxpayer’s account in the bank.

When making its inquiry on entry the tax administration must demonstrate the proper behavior and avoid any possible damage to the honor or the business of the taxpayer. In any case, the on site inquiry shall not be more than what is necessary.

Article 101: Requirement to Register
A person must register with the tax administration within 15 days after the person begins economic activity.
 
A person shall inform the tax administration within 15 days of any change in the address, form, name, or object of the business, the transfer or cessation of the business, the leadership or the person in charge of tax matters of the enterprise.
 
Article 102: Certificate of Registration and Tax Identification Number
When the registration is complete the tax administration shall issue a certificate of registration which will include the tax identification number of the person. This identification number shall be used on all tax related documents.
 
All departments under the Ministry of Economy and Finance shall use the identification number of this article. All contracts with government institutions must bear the tax identification number to be considered valid.
 
Article 103: The Right of the Tax Administration to Register a Taxpayer
The tax administration has the right to register a person who is required by law to be registered and who has failed to register. In this case, the tax administration can determine the effective date of registration.

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