Eurocham, Amcham and VDB Loi meet with GDT to help fix tax issues for foreign investors in Cambodia

VDB Loi’s Edwin Vanderbruggen and Laysym Sim facilitated the technical input at a consultation between Eurocham, Amcham and the GDT on 5 October 2023 at the GDT head office. Here is a selection by us of some of the key things that were discussed which may have practical impact for businesses and investors. Much of the discussion centered on tax audits and the consequences of reassessments, such as penalties and interests. The GDT attended with around 100 tax officials, presided over by H. E. Kong Vibol.

Some interesting notes: 

• Much of the discussion centered around the long and multiple tax audits which taxpayers undergo. The GDT acknowledged that some officials are overzealous, but noted that only 4,000 of 100,000 registered taxpayers is audited per year (4%). Edwin Vanderbruggen noted that some taxpayers are highly non-compliant and that the compliant ones are paying the price for this. Many taxpayers make mistakes because they do not have qualified persons doing their taxes.   

• In response to a suggestion to lower moratory interest rates, the GDT noted that interests are in line with several other ASEAN countries.

• Predictability of tax laws: Edwin Vanderbruggen suggested to publish a sanitized version of all tax rulings and DTA application approvals.

• In response to a question on long response time for confirmation of independent auditor/proper accounting records, the GDT agreed that this should be done online instead, as soon as possible. For context, Cambodia has a Minimum Tax of 1% on gross revenue, which is kind of an alternative to the 20% tax on net income. That Minimum Tax was created in 1997, because there was not much confidence yet in the accounting calculation of the taxpayer’s profit. Presently, taxpayers get exempt from Minimum Tax if they use an independent auditor and have proper accounting records. The chambers reported that to have this confirmed on an individual basis was taking too long.

• There was a substantive discussion on sale of shares and transfer tax. On this issue the GDT said it understood the point of view of the private sector and would reevaluate.