As you are all aware, following the introduction of Prakas 986 (the transfer pricing regulations), Instruction Letter 151, which permitted interest-free loans between related parties, was withdrawn, and under Instruction 11946, such loans were required to bear interest.
On 7 March 2019, at a meeting with the Tax Working Group, the General Department of Taxation (“GDT”) confirmed that following internal and external consultations, interest-free, or lower-than-market interest rate loans between related parties would again be acceptable, provided they are not being used to extract profits.
Credit is due to the leadership of the GDT for recognizing the importance of facilitating the availability of investment funding in Cambodia, rather than requiring a rigid application of the transfer pricing regulations, which might hinder this.
We will provide further updates on this important topic as soon as something is issued by the GDT. In the meantime, if you have any questions, please contact the undersigned, or your usual VDB Loi adviser.
VDB Loi is a network of leading law and tax advisory firms with offices in Cambodia, Indonesia, Laos, Myanmar and Vietnam. We provide the highest quality solutions for transactions and taxation. Our general areas of practice are corporate, finance, licensing and disputes. Our principal specialized areas of practice are energy, infrastructure, real estate and construction, telecom, and taxation.
You can find more information on our Cambodia office here.
Robert Porter | Director
+855 10 333 509
+855 23 964 430~434
+855 23 964 154
No. 33, Street 294 (corner of Street 29)
Sangkat Tonle Bassac, Khan Chamkarmorn
Phnom Penh 12301
This e-mail is confidential and may also be privileged. If you are not the intended recipient, please notify the sender immediately,
delete it from your system and do not copy, disseminate, distribute or disclose any information contained therein. Thank you.