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The Ministry of Economy and Finance ("MEF") issued Prakas No. 559 on 25 May 2017 ("Prakas 559") concerning the implementation of value-added tax ("VAT") for non-taxable supplies. Prakas 559 aims to provide all taxpayers the exhaustive list of non-taxable supplies as well as provide certain relevant definitions following the amendment in the 2017 Law on Financial Management. There are 11 categories of the supplies that are non-taxable in Cambodia, meaning that taxpayers operating with these 11 categories are not required to charge VAT to the customers.
According to Article 5 of Prakas 559, the 11 categories of non-taxable supplies are as follows:
- Public postal service;
- Hospital, clinic, medical and dental services and the sale of medical and dental goods incidental to the performance of such services;
- Services of transportation of passengers by a wholly state-owned public transportation system;
- Insurance services;
- Primary financial services;
- Importation of articles for personal use that exempt from custom duties;
- Non-profit activities in the public interest;
- Educational services;
- Electricity and clean water;
- Unprocessed agricultural products; and
- Services relating to the collection or removal of waste material either solid or liquid
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The Ministry of Economy and Finance ("MEF") issued Prakas No. 518 on 5 May 2017 ("Prakas 518") concerning the implementation of withholding tax ("WHT") on dividend distributions. Prakas 518 aims to provide clarity and guidance on the application of the WHT regulations on dividend distributions from resident taxpayers in Cambodia to their non-resident shareholders with reference to Articles 26 (new) and 33 (new) of the Law on Taxation, stating that a dividend that is distributed from a resident taxpayer to a non-resident taxpayer will be subject to a 14% WHT on the amount paid.
According to Article 6 of Prakas 518, if the conversion of retained earnings to share capital is correctly processed, it will not be considered as a distribution of dividends and therefore not subject to WHT. The conversion is treated as correctly processed when a taxpayer fulfils the following conditions: (1) has a resolution of the Board of Directors approving the conversion; and (2) has any evidence to show that the change in share capital has been approved by the Ministry of Commerce, and the increase in share capital has been reflected in the Memorandum and Articles of Association.
However, Article 7 of Prakas 518 states that subsequent to the conversion, upon the sale of shares by the non-resident shareholders or the distribution of share capital to non-resident shareholders, either during operation or at liquidation, the portion of the share capital that has been originally converted from retained earnings will be subject to 14% WHT.
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The Ministry of Commerce ("MOC") issued Prakas No. 125 on 05 May 2017 ("Prakas 125") regarding the procedure for online trademark registration. According to Prakas 125, an applicant who has permanent residence or business operations located in the Kingdom of Cambodia can file the application online by himself; alternatively, an applicant who has permanent residence or business operations located abroad can file the application through a trademark agent. The online trademark registration must be done via this website address: www.efiling.cambodiaip.gov.kh. Furthermore, for the online filing, all users are required to have a user ID and password, which can be requested from the Department of Intellectual Property Rights ("DIPR") of MOC.
Any person who provides false information during the submission of online trademark (or any other services related to online trademark) registration application shall be sanctioned in accordance with article 63 of Law concerning Marks, Trade Names and Unfair Competition.
However, after the online submission of the application, the original copy and the certified true copy of the required documents must also be manually submitted to the DIPR.
Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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R&T Sok & Heng Law Office
Vattanac Capital Office Tower
Level 17, No. 66, Preah Monivong Boulevard,
Sangkat Wat Phnom, Khan Daun Penh
120211 Phnom Penh, Cambodia
http://kh.rajahtannasia.com
Contacts: Heng ChhayManaging PartnerD +855 23 215 734 F +855 23 726 417 heng.chhay@rajahtann.comSok KhavanPartnerD +855 23 215 734 F +855 23 726 417 sok.khavan@rajahtann.comDesmond WeeDirectorD +65 62320474desmond.wee@rajahtann.com| Rajah & Tann Asia is a network of legal practices based in Asia. |
Member firms are independently constituted and regulated in accordance with relevant local legal requirements. Services provided by a member firm are governed by the terms of engagement between the member firm and the client. |
This update is solely intended to provide general information and does not provide any advice or create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on this update. |
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