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Pursuant to this Prakas, dated 24 February 2014, all Banking and Financial Institutes ("BFIs") are no longer allowed to transfer monies in US Dollars to foreign countries without first going through the National Bank of Cambodia ("NBC"). This prohibition applies to all BFIs that obtained a banking license from the NBC.
The NBC requires the transferring BFIs to submit certain prescribed documents, such as an Oversea Transfer Order, Local Sources and Uses of Fund, and other relevant documents. Moreover, the transfer shall be subject to an interest rate of 0.12% of the proposed transfer amount plus a minimum of KHR 30,000.00 (approximately USD 8.00 [eight US Dollars]) and a SWIFT of KHR 120,000.00 (approximately USD 30.00 [thirty US Dollars]). These fees will be deducted from the current account of the transferring BFIs opened with the NBC.
This Prakas, dated 9 March 2014, serves to recognise the major role played by the garment, textile, footwear, bag and hat industries in Cambodia's economic development, granting Value-Added Tax ("VAT") preferences for supporting industries and contractors in these industries.
For supporting industries, the Royal Government of Cambodia ("RGC") will bear the VAT for the import of raw materials and production equipment, while local purchases of goods and services will be subject to VAT of 10%. The supply of goods and services to these industries for the purpose of export will be subject to a 0% VAT, while the supply to local markets will incur a 10% VAT and other taxes in accordance with the law.
For contractors, the import or local purchase of raw materials and production equipment will incur a 10% VAT and other taxes in accordance with the law. The supply of goods and services to these industries for the purpose of export will be subject to a 0% VAT, while the supply to local markets will be subject to 10% VAT.
Under this Prakas, dated 19 March 2014, the RGC will bear the VAT for the import of products in relation to the agricultural sector, such as all types of fertilizer to be used in farming and plantation, animal feed and medicine, crop seeds, and other agricultural machinery.
The RGC aims to encourage the development of the agriculture sector by allowing sufficient access to imported products needed by farmers in their production processes.
Under this Prakas, dated 19 March 2014, the RGC will bear the VAT on behalf of contractors importing any raw materials or other products to be used in the production of rice for export. Further, the contractors supplying rice or providing rice production services for the purpose of export shall be subject to 0% VAT.
However, in order to obtain such incentives, the contractor must submit an application form to the General Department of Taxation of the Ministry of Economy and Finance.
This Prakas is only applicable to the export of rice. Any domestic purchase or supply of rice shall be subject to 10% VAT and other applicable taxes.
The General Department of Customs and Excise has issued this Letter, dated 14 March 2014, in order to assist investors and businesspersons who have high legal compliance in fulfilling customs formalities. The Letter instructs all Customs and Excise Officers to:
- implement the Post Clearance Audit mechanism only on high-risk businesspersons;
- increase the speed of customs clearance at all international ports, ensuring that customs clearance is completed no later than 4 hours from the time of registration of the customs declaration to the time the goods are permitted to be taken out of customs;
- create and introduce the Master List to decentralise the issuance of customs permits;
- dispense with the need for prior authorisation from the customs and excise unit in the delivery of goods (raw materials, semi-finished products or finished products) between contractors and factories in the preferential areas; and
- strengthen the effectiveness of the implementation of professional ethics and behavior of customs and excise officers to ensure sustainability in providing public service.
This Notification, dated 26 May 2014, dictates a change in the process of setting up a company in Cambodia. In the interest of efficiency, businesspersons and investors may submit their company registration application forms to the One-Window Service Office of the Secretariat of Small and Medium Enterprise under the Ministry of Industry and Handicraft. The officials of the One-Window Service Office will provide the assistance needed for the applicants to obtain all relevant approval from the competent authorities.
This Notification also clearly sets out the categories of SMEs by capital, such as Small Enterprise (USD 50,000 – USD 250,000) and Medium Enterprise (USD 250,000 – USD 500,000), and by the number of employees, such as Small Enterprise (10 – 50 employees) and Medium Enterprise (51 – 100 employees).
However, the Notification has yet to take effect and, as a matter of practice, applicants must still submit their company registration application forms to the Ministry of Commerce.
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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