Last week the General Department of Taxation (“GDT”) issued a press release to confirm that the Double Taxation Agreements (“DTAs”) signed in 2016 and 2017 between Cambodia and Singapore, and Cambodia and Thailand, respectively, became effective 1 January 2018, following the issuance of a Royal Decree on 9 December 2017 announcing that the parties to the DTAs had completed all internal procedures to give effect to them.
To determine whether any administrative procedures need to be completed prior to utilizing DTA provisions, VDB Loi requested a meeting with the International Tax Cooperation Bureau (“ITCB”) of the GDT, which is the department responsible for implementing the DTAs.
Senior officials of the ITCB confirmed at that meeting that in order to utilize the DTA provisions, an application for advance approval must be filed by the recipient of the beneficial treatment under the DTA. The application will need to be on a special form, which is not yet available. The requirements to be stated on the form will focus on eligibility for DTA relief (i.e. the recipient of the DTA benefits will need a certificate of tax residency), and beneficial ownership, evidenced by a company registration certificate and details of shareholders.
The ITCB officials confirmed that as an interim measure they will accept an application letter (with the appropriate supporting documents) until such time as the form is available. However, they made it clear that reduced DTA rates must not be used without their advance approval. Approval granted for a particular benefit will be valid for one year.
It is to be hoped that the need for advance approval will not cause unreasonable delays in taking advantage of DTA provisions, and the ITCB did confirm that their objective is to deal with applications for approval in a timely and efficient manner.
If you have questions about the content of this alert, or would like to seek assistance with the preparation of a DTA approval application, please contact the undersigned, or your regular 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.
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Robert Porter | Director
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Phnom Penh 12301
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