The Royal Government of Cambodia ("RGC") has issued Sub-Decree No. 84 ANK.BK on Business Registration through IT Platform dated 10 June 2020. The Business Registration through IT Platform ("Single Portal") was officially launched on 15 June 2020 and has since been in operation.
The Single Portal aims to facilitate and modernise the registration procedure for new businesses by requiring the submission of a set of application documents, with a cost-effective and speedy approval process.
The applicant or his/her representative1 shall create a CamDigiKey account in the Single Portal in order to populate and submit the required information and apply via this link. Once the application is submitted, the Ministry of Commerce ("MOC"), the General Department of Taxation ("GDT") and the Ministry of Labour and Vocation Training ("MLVT") will review the accuracy of the documents submitted and issue approval documents in digital form within eight working days in the following chronological order: three days by MOC, four days by GDT and one day by MLVT. The applicant will be informed if any information or document needs to be rectified.
For first-time business registrations, the Single Portal issues only the substantial documents, being the Certificate of Incorporation, Patent Tax Certificate, Tax Registration Certificate (VAT), Tax ID Card, GDT Letter on Tax Compliance and Declaration of Opening of the Enterprise. For other regulatory filings in compliance with the Law on Commercial Enterprises, the Law on Taxation and the Labour Law, such as the change in the composition of the board of directors, change of shareholders, transfer of shares, increase of capital, change of company details, filing of Annual Declaration of Commercial Enterprise and labour compliance, the applicant shall submit the applications for such changes to the respective authorities or their current online systems as usual.
Where the applicant also applies for a Qualified Investment Project with the Council for the Development of Cambodia ("CDC") and the investment is not in the restricted sectors, CDC shall review the accuracy of the required information and documents, and issue the Project Registration Certificate to the applicant within 20 working days after the submission of the application.
At this first stage, through the Single Portal, the applicant can reach out to the following main authorities: MOC, GDT, MLVT, Ministry of Interior, CDC and Ministry of Economy and Finance for the main business registration services. At the second stage, the Single Portal will also allow businesses to register and apply for permits, among other things, with other authorities, such as the Ministry of Industry, Science, Technology and Innovation, Ministry of Tourism, Ministry of Posts and Telecommunications, General Department of Customs and Excise and Ministry of Agriculture, Forestry and Fisheries.
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1 The representative shall be acknowledged by the competent authorities and granted with the Power of Attorney for submission on behalf of the applicant. However, only the MOC and GDT currently have authorised agents to represent the applicant, while the MLVT has not formed any agent yet. Therefore, as a matter of practice and verbal confirmation, a representative can act for the applicant in the Single Portal by attaching the Power of Attorney into the system.
The Ministry of Labour and Vocational Training issued Notification No. 019/20 dated 10 June 2020 on the schedule of minimum wage negotiations in the textile, garment and footwear sectors for 2021 ("Notification").
The Notification schedules the negotiations as follows:
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The employers' representatives, the unions' representatives and the Royal Government of Cambodia's representatives will conduct their separate internal negotiations on the minimum wage in July 2020.
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The bilateral and tripartite negotiations on the minimum wage will be conducted in August 2020. Bilateral negotiations refer to the discussions between (i) the employers' representatives and the unions' representatives; (ii) the employers' representatives and the Royal Government of Cambodia; and (iii) the Royal Government of Cambodia and the unions' representatives. Tripartite negotiation refers to the discussion among all three parties.
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The National Committee for Minimum Wage will decide the minimum wage in September 2020.
The negotiations on the minimum wage must comply with Article 5 of the Law on Minimum Wage. The negotiated minimum wage will come into effect on 1 January 2021.
On 27 April 2020, the General Department of Immigration of the Ministry of Interior issued Letter No. 0183 ("Letter") on Non-Extension Visa for Foreigners who have not Registered in the Foreigners Present in Cambodia System ("FPCS").
FPCS is the Foreigners Present in Cambodia System which was put in place by Guideline No. 009 dated 25 March 2010 with the aim of effectively enforcing the Cambodian Law on Immigration.
The Letter is issued in line with Guideline No. 028 dated 19 July 2019 on the Management of Foreigner's Presence in the Kingdom of Cambodia ("Guideline") which follows Guideline No. 009 dated 25 March 2010 on the Management of Foreigner's Presence in the Kingdom of Cambodia. This Guideline requires the owners or possessors (but not limited to foreign owners or possessors) of all accommodations to report foreigners' presence in their places of accommodation to the Police Commune-Sangkat Office following the sample report provided or the FPCS within 24 hours. The report shall indicate the duration of the stay, any period of extension and any accident occurring to the foreigners. The accommodation owners or possessors shall be punished in accordance with the Cambodian Law on Immigration and other applicable laws for failing to comply with the reporting requirement.
Based on the Letter, the General Department of Immigration will not extend a visa for any foreigner who has not registered in the FPCS. This implementation will come into effect on 1 July 2020 onward. The owners of all accommodations shall report the presence of foreigners who are living in their places into the system to obtain a visa.
On 24 March 2020, pursuant to the Royal Government of Cambodia's intention to improve the economy and to support the garment sector (i.e. textile, footwear, bags, and hats) due to the impact of the partial suspension of the Everything But Arms ("EBA") trade scheme, the Ministry of Economy and Finance issued Prakas No. 319 ("Prakas") providing tax relief on tax on income for the impacted garment sector taxpayers.
According to Article 4 of the Prakas, the formula for calculating the level of real impact for the purpose of determining whether the taxpayer qualifies to receive the tax relief is as follows:
Impacted export amount
Level of real impact = ----------------------------------- x 100
Total export amount
Furthermore, Article 5 of the Prakas outlines the relief on tax on income for tax year 2020 for the garment sector companies producing textile, footwear, bags, and hats based on the level of real impact as follows:
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Exempt tax on income for a period of six months for garment sector companies that have the level of real impact ranging from 20% to 39%, by waiving 50% of the total annual income tax liability.
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Exempt tax on income for a period of one year for garment sector companies that have the level of real impact ranging from 40% to 100%, by waiving 100% of the total annual income tax liability.
To receive the tax relief provided in Article 5, the garment sector companies producing textile, footwear, bags, and hats are required to submit the necessary documents on the level of real impact from the partial suspension of the EBA trade scheme to the tax administration during the preparation and filing of the annual tax on income.
The Ministry of Economy and Finance ("MEF") has issued Prakas No. 209 on Tax Incentives for Educational Institutes dated 2 March 2020 ("Prakas").
The Prakas aims to provide tax incentives for the education sector in order to support and enhance human resources development and to reduce the expenses of parents and guardians of students. The Prakas sets out the mechanisms for determining the implementation of tax on income, withholding tax and Value-Added Tax ("VAT") that are applied to educational institutes in the Kingdom of Cambodia.
Under the Prakas, "Educational Institutes" refers to public and private educational establishments which provide educational service from kindergarten to tertiary education. This also includes technical and vocational training institutes. The Educational Institutes are provided with the following tax incentives:
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Suspension of the payment of Minimum Tax of 1% on annual turnover until the end of 2023;
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Suspension of payment of Prepayment of Tax on Income until the end of 2023; and
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Payment of tax on income only if there is taxable income.
The provision of educational scholarships to students, either in full or partially, will not be considered as taxable revenue for the calculation of annual tax on income. The proof of such scholarships is required.
In relation to withholding tax, Educational Institutes are required:
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For transactions with resident taxpayers who are not under the Self-Assessed Regime: to withhold tax for services on construction, engineering, architecture and other services which indirectly involve the students' education; for rent of movable or immovable property; and royalties. Withholding tax for interests and management or consultation services or other similar services which directly involve the student's education shall be exempted. In such cases, the receipts or documents proving the payments shall be submitted to the tax authority on a monthly basis; and
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For transactions with non-resident taxpayers: to withhold tax on royalties, rentals and other revenues related to the use of the subject property. Withholding tax for interests, dividends, and management and technical services which directly involve the students' education shall be exempted.
In relation to VAT, the provision of educational service, and the supply of goods and other services for education including food and accommodation for students are considered as non-taxable supplies. VAT inputs related to the provision of non-taxable supplies cannot be claimed as VAT credit but are allowed as deductible expenses.
Despite the fact that the above incentives are made available to the Educational Institutes, they are still obliged to comply with the prescribed tax obligations such as: (i) tax registration; (ii) monthly and annual tax declarations; (iii) having appropriate accounting system; and (iv) for educational establishments having an annual turnover of more than KHR 4,000 million, submission of the audited financial statements performed by a licensed independent accounting firm.
The Prakas is effectively applicable starting 2 March 2020. However, the incentives set out therein will not be applicable to any educational establishment that fails to comply with the provisions of the Prakas.
