Strengthening Business Registration Requirements and Trademark Protection for Media Operators

The Ministry of Commerce ("MOC") and the Ministry of Information ("MOINFO") have jointly issued an inter-ministerial Prakas No. 0256 MOC.BR.PrK dated 28 August 2020 on the Management of Business Registration, Protection of Trademark and Tradename for Information and Audio-visual Licenses ("Joint Prakas").

The Joint Prakas applies to all natural and legal persons that are engaged in providing information and audio-visual related services in Cambodia. It aims to regulate information and audio-visual operators ("media operators") in terms of compliance with business registration requirements and use of trademarks.

By registering their trademark and tradename, media operators will be assured that their business identities/names do not overlap with each other. The Joint Prakas also secures the legal benefits of media operators facing any unfair competition, and emphasises the prohibition on the use of trademarks and tradenames which may affect public order, social morality, national traditions and restricted trademarks.

To avail themselves of the above safeguards, new media operators must apply for business registration via the Business Registration Platform of MOC within two weeks from receipt of the in-principal approval from MOINFO. Existing media operators are required to apply for business registration within six months from receipt of the in-principal approval from MOINFO. Registration with MOC may take up to three working days.

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National Consumer Protection Committee Established to Promote Consumer Protection and Good Faith Dealings in Commercial Transactions

The National Consumer Protection Committee ("NCPC") was established pursuant to the Law on Consumer Protection which was promulgated in November 2019. On 27 August 2020, almost ten months following the adoption of the Law on Consumer Protection, the Royal Government of Cambodia ("RGC") issued Sub-Decree No. 135 on the Organization and Functioning of the National Consumer Protection Committee ("Sub-Decree 135").

Sub-Decree 135 aims to promote the effective implementation of the Law on Consumer Protection and encourage good faith dealings in commercial transactions.

The key features of Sub-Decree 135 are set out below.

Composition of NCPC

NCPC is presided over by the Minister of the Ministry of Commerce ("MOC"). It is composed of the representatives of the relevant ministries as the Vice Presidents, and the members and the Director-General of the General Department of the Consumer Protection, Competition and Anti-counterfeit as the Secretary.

Each member has a five-year renewable tenure. Members of NCPC can be removed by a 2/3 majority vote of the members present at a meeting convened for this purpose, or if convicted of a criminal offence.

The total number of NCPC members shall not exceed 15 and such members shall be specifically appointed by the RGC.

Promotion of Consumer Protection and Good Faith Dealings in Commercial Transactions

To achieve the above-captioned aims, NCPC has the following duties:

1. Prepare and disseminate policies and strategies related to consumer protection;
2. Request RGC to examine and amend laws and regulations related to consumer protection, if necessary;
3. Request for advice or decisions from RGC regarding the implementation of the Law on Consumer Protection;
4. Examine and find solutions in the event of conflict between related regulations prepared by different regulators;
5. Provide consultations to consumer associations and organisations on issues related to consumer protection;
6. Examine and decide on rules and procedures necessary for the implementation of the Law on Consumer Protection;
7. Facilitate, cooperate, and enter into agreements with entities, competent regulators of relevant industries, or development partners related to consumer protection on national, regional and international levels;
8. Establish working groups to implement any necessary work or invite representatives of relevant ministries and entities to implement the Law on Consumer Protection;
9. Examine and provide solutions to petitions or cases initiated by NCPC itself in relation to consumer protection;
10. Issue decisions to disclose or re-disseminate information, and/or prohibit a person who violated the law from assuming management role, as well as determines, upon the request of competent regulators or the Director General of the General Department of the Consumer Protection, Competition, and Anti-counterfeit, other administrative punishments that are appropriate under the circumstances;
11. Provide opinions to the Minister of MOC for purposes of determining non-good faith acts and practices;
12. Decide to publish written warnings;
13. Provide consultations and cooperates with competent regulators to determine the content of the standard information for consumers;
14. Request RGC to set the schedule for the National Day of Consumer Protection; and
15. Execute other duties as the Prime Minister may direct.

Meetings and Decision Making

The members of NCPC must attend at least four regular meetings per year, and other meetings convened by NCPC.

The meeting quorum shall be more than half of the total members and the decision shall be made by majority of the members present at each meeting. The president of NCPC shall have the casting vote.

Financial Sources

The financial sources of NCPC include:

1. the budget of MOC;
2. funds from all legal sources and local and international cooperative financing; and
3. transitional fines and other service fees as may be determined by MOC and the Ministry of Economy and Finance.

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Strengthening Measures for Enforcement of the Law on Telecommunications

To implement the regulations in the telecommunications sector more effectively, the Telecommunication Regulator of Cambodia ("TRC") issued Guideline No. 1606 dated 12 August 2020 on Strengthening Measures for Enforcement of the Law on Telecommunications ("Guideline"). The Guideline requires telecommunication operators ("Telecom Operators") to comply with certain obligations including the following:

1. Self-declare and pay the licence fees (allocated revenue) in a timely manner, and contribute 2% of the Telecom Operators’ gross annual revenue to the Universal Service Obligation Fund and 1% to the Capacity Building, Research and Development Fund, and other relevant profits to the Ministry of Posts and Telecommunications ("MPTC") in accordance with the Law on Telecommunications ("LoT") and relevant regulations. 
   The Telecom Operators shall further self-declare and pay the regulatory fees and/or provide a monthly report on telecommunication service figures to TRC no later than the tenth day of the month immediately following.
2. Immediately interconnect with and provide relevant figures to the Telecom and Information Technology Data Management Center ("TITDMC") by the end of December 2020 for any Telecom Operator who has failed to do so in accordance with Article 6 of the LoT and Sub-Decree on the Establishment of Data Management on Telecommunication Services and Information Technology.
3. Resolve with MPTC any differences between the figures that a Telecom Operator has self-declared for payment of allocated revenue and regulatory fees and the figures received by TITDMC. This may occur when Telecom Operators have unlawfully relaxed or are relaxing the flow of traffic and the size of their revenue. In the event that the Telecom Operator fails to rectify the problems, Articles 85 to 88 of the LoT on evasion of cash settlement obligations and exploitation over quantity of telecommunications services may be enforced.
4. Immediately cease any unlawful competition and provision of telecommunication services without quality or integrity through different promotion packages that confuse users. Disconnections or blockage of the flow of traffic of other Telecom Operators are also prohibited.
   All promotions or network disconnection of Telecom Operators shall first be approved by TRC pursuant to applicable regulations.
5. Strictly comply with Guideline No. 1252 dated 30 June 2020 of TRC for any amendment of the memorandum and articles of association, address, shareholder of the company, merger of the company, acquisition of the company or share, succession, pledge as security over rights conferred by relevant approvals. For more details, please refer to our Update titled "TRC Issues Guidelines Requiring Telecommunication Operators to Seek Approval Prior to Certain Activities".

From the effective date of this Guideline, 12 August 2020, Telecom Operators shall be held strictly responsible for any non-compliance with the Guideline.

For more information, click here to read our Legal Update.

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Prakas No.346 to Impose Capital Gains Tax on Resident and Non-Resident Taxpayers to Take Effect on 1 January 2021

The Ministry of Economy and Finance ("MEF") has issued Prakas No.346 on Capital Gains Tax ("CGT") dated 1 April 2020 ("Prakas"). The Prakas was intended to be effective from 1 July 2020. However, the Director General of the General Department of Taxation ("GDT") has verbally announced that the implementation of this Prakas will be delayed to 1 January 2021.

The purpose of the Prakas is to impose tax on capital gains realised by both resident and non-resident taxpayers. Article 4 of the Prakas explicitly defines a resident taxpayer as being limited to a natural person resident taxpayer, whereas a non-resident taxpayer includes both a natural person and a legal entity non-resident taxpayer.

Key Features of the Prakas

Definitions of "capital asset" and "capital gains"

Under the Prakas, a capital asset refers to immovable property, leases, investment assets, goodwill, intellectual property, and foreign currency. Article 4 describes capital gains as the taxable income derived from the proceeds of sale or transfer of the capital asset less allowable expenses.

Article 6 sets out the instances in which capital gains are realised as follows:

1. When there is a sale, transfer or creation of possession rights for a capital asset;
2. When a registration is made with relevant competent authorities on the transfer of ownership or possession rights of a capital asset;
3. When there is a transfer of ownership or possession rights of a capital asset through a final and binding court judgment.

Two methods of calculating capital gains for the purpose of determining CGT

Where the capital asset is an immovable property, Article 8 provides two methods to calculate the capital gains for the purpose of CGT as follows:

1. Fixed percentage cost method – A taxpayer can deduct 80% of the sale/transfer proceeds as the assumed total cost of such immovable property.
2. Actual cost method – Actual expenses incurred pertaining to the immovable property and evidenced by proper supporting documents including invoices, receipts, agreements are allowed as deductible expenses.

For a capital asset other than immovable property, only the actual cost method is allowed for the purpose of capital gains calculation.

The calculation of capital gains or losses of a capital asset is treated separately. When the actual cost method is used and the actual expenses incurred are greater than the sale/transfer proceeds, the surplus is not allowed to be claimed as a refund or used to set off against the capital gains of another capital asset.

CGT is taxable at the rate of 20% pursuant to Article 10. 

Consequences of failure to pay CGT

The taxpayer is required to file a prescribed tax return and pay the relevant CGT at the tax office within three months upon the realisation of the capital gains.

It is important to note that Article 17 emphasises that a failure to pay the relevant CGT shall render the transfer of the ownership or possession right over a capital asset legally incomplete.

Exempt transactions

CGT is exempted on the sale/transfer of certain properties and rights including the following:

1. Property owned by a governmental institution;
2. Property owned by a diplomatic mission, foreign consulate, international organisation or technical cooperation agency of other governments;
3. The residence which is the principal place of residence of a taxpayer for at least five years prior to the sale/transfer; and
4. Properties sold or transferred for the public interest in accordance with the Law on Expropriation.

CGT with respect to capital gains realised from overseas assets

In relation to capital gains realised from an overseas asset, the resident taxpayer is required to pay CGT to the GDT only with respect to the difference between the lower amount of CGT paid overseas and the CGT calculated in accordance with this Prakas.

Guidance to Implementation relating to other capital assets

It is expected that the GDT would issue implementation guidance before the Prakas comes into operation on 1 January 2021, to cover in more detail other capital assets including the sale of shares in private or non-listed entities or the sale of foreign currency. We will provide a further Update when there is a new release on CGT from the GDT.

For more information, click here to read our Legal Update.

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Law on Mutual Legal Assistance in Criminal Sector

The Law on Mutual Legal Assistance ("Law") was promulgated on 27 June 2020. The Law sets out the requirements and procedures for Cambodian authorities to process legal assistance requests in the criminal sector from other nations. The assistance provided under the Law can be in the form of freezing, retention, or confiscation of assets related to criminal activities. The Law applies where there is no pre-existing agreement on the matter.

Any pre-existing agreements (including extradition treaties) between Cambodia and other nations shall supersede the Law with regard to the legal assistance provided between the related nations. However, all internal procedures with regard to any such legal assistance shall be governed by the Law regardless of the existence of any separate agreements unless otherwise stated under any such pre-existing international agreements or as otherwise stated under any other laws of Cambodia. Among other things, the law stipulates that Cambodia’s assistance is extended on the basis of reciprocity. The Ministry of Justice is the central authority that is responsible for any formal communication with respect to providing mutual legal assistance.

The legal assistance provided under this law is limited to the following:

1. collection of evidence and testimony;
2. searches and retention;
3. presentation of evidence in court;
4. disclosure of information under the purview of Cambodia;
5. liaising on court documents;
6. transfer of detained persons for evidence discovery;
7. location identification;
8. asset identification;
9. execution of requested freeze, retention, or confiscation of assets; and
10. confiscation of evidentiary equipment from financial institutions.

Based on the Law, a request for legal assistance must be refused where: (i) it interferes with national sovereignty, national security, or public order/interest, (ii) the matter involves a political or military crime; (iii) it is discriminatory in nature; or (iv) it may lead to torture. A request for legal assistance may be refused where: (i) the underlying charge is not a crime in Cambodia in cases where the act has taken place in Cambodia’s territory; (ii) the assistance would overburden Cambodia’s resources; (iii) the assistance would adversely affect any ongoing criminal investigation or procedures in Cambodia; or (iv) there are any other obvious reasons for refusing legal assistance.

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