Several new tax incentives were announced on November 13th 2023, following the 19th Cambodian Government-Private Sector Forum (G-PSF) held at the Peace Palace in Phnom Penh. The Capital Gains Tax was also announced to once again be delayed.
The event saw the participation of various private sectors, foreign chambers of commerce, and ambassadors to Cambodia. Prime Minister Hun Manet, addressed the forum and outlined the government’s intention to forge a collaborative process with the private sector and their ambitions for the Kingdom to become a high-income country by 2050.
Manet said, “The government has four purposes in taxing land which is not in use. First, we will prevent people from buying dozens of hectares of land for speculation. This will also prevent them from selling it at a higher price and taking advantage of the market, leading to a loss of productivity. Second, it will encourage them to use the land in line with our development goals. Third, we aim to increase economic activity and create employment opportunities and fourth, we aim to increase tax revenue, in order to increase the available budget for sub-national expenditure.”
These tax reforms and incentives are intended to stimulate economic growth and attract investment, and the extension of tax incentives, suggests the government’s acknowledgement of particular industries’ contribution to Cambodia’s economy.
The standard tax year in Cambodia runs from 1 January to 31 December and electronic filing for the 2023 annual Tax on Income (TOI) declaration with the General Department of Taxation (GDT):
- Must be completed by the 31st of March 2024, or;
- Within three months after the end of the tax year for enterprises that have a non-standard tax year.
What Are The New Cambodian Tax Incentives – November 2023
According to DFDL, the main tax reforms can be outlined below:
- Capital Gains Tax Delayed Again: The implementation of Capital Gains Tax on Capital, (immovable property, finance leases, investment assets, goodwill, intellectual property, and foreign currency) has been further postponed until the end of 2024.
- Accounting and Auditing Regulator (ACAR) penalties: The ACAR will revisit how it has applied penalties to non-audited enterprises who have not been able to meet their financial statements filing requirement (introduced in 2022). Non-audited enterprises have until the end of February 2024 to meet their requirements. The ACAR has been asked to be more circumspect as to how it applies interim penalties and more proactive in providing information about compliance requirements to the wider public.
Cambodia Property Taxes
- Stamp Duty Exemptions Extended: The exemption on stamp duty for the transfer of ownership of buildings in Boreys valued under USD $70,000 will continue until the end of 2024. Additionally, for purchases of such properties, the sum of USD $70,000 can be deducted from the stamp tax base if the purchase prices exceed USD $70,000.
- This tax exemption extends to stamp duty on real estate transfers within family relationships, including parents to children, grandparents to grandchildren, spouses, and husbands for gifts and inheritance.
- Tax on Immovable Property: Owners can now register and pay taxes on immovable property that was not previously registered. Penalties and interest rates on the tax on immovable property will be waived until the end of June 2024. However, this does not apply to taxes already paid. Taxes and administrative penalties arising from submitted immovable property tax declarations made in error are exempted until the end of 2023.
- Unused Land Tax: The government will provide further clarification and incentives regarding this tax from 2025. The RGC could be looking to tax unused land that exceeds 5 hectares or more in size.
Cambodian Agriculture Tax Incentives
- Agricultural Sector Tax Incentives: Prakas 252 – introduced in 2019 to provide VAT, Minimum Tax and WHT Tax incentives to agricultural enterprises producing rice, corn, bean, pepper, cassava, cashew nuts and rubber for domestic supply and/or export – has been extended until the end of 2025.
The government will continue to exempt taxes on family-owned agricultural land, agricultural equipment, agricultural products, and real estate valued at less than USD $25,000.
These incentives now also include:
- Agricultural enterprises producing Logan fruit, Mango, Aquaculture, animal husbandry and local palm oil products (as raw material for animal feed).
Enterprises must meet specific conditions and provide necessary documentation to the GDT to qualify. Agricultural enterprises outlined above will also have an exemption from the monthly Pre-payment of Tax on Income (PTOI) until the end of 2025.
Cambodian Investment Incentives
- Qualified Investment Project (QIP) Incentives: Under the new Law on Investment and implementing Sub-decree, a QIP must provide evidence of external audited financial statements to be exempted from Minimum Tax and PTOI.
- For those QIP’s in their first year, the external audited financial statements do not need to be produced until June of the following year to be eligible for the incentives.
- The PTOI suspension continues until the end of 2025 for QIP enterprises that produce: garment logos, gloves, socks, towels, pillowcases, duvet covers, bed sheets etc. provided tax compliance requirements are met.
- Voluntary Disclosure Incentives: The current voluntary disclosure incentives brought in under Prakas 217 in 2022 will expire by June 2024.
- Tax Administration Reform: The government aims to establish clear standards and transparency in tax implementation, putting in place standard operating procedures for tax officers to adhere to.
Cambodian Customs Exemptions
- Customs Processing Fee Exemption: This applies to imported or exported goods valued below USD $1,000, as well as a reduced custom fee for these goods.
- Electronic System for Cargo Declaration: This is due to be implemented from January 1, 2024.
- Visit Siem Reap 2024 tourism promotion initiative: Monthly tax exemptions (excluding VAT) for hotels, guesthouses, and travel agencies will be in force from October 2023 until 1 April 2024, in addition to an exemption from Tax on Income for the 2023 tax year.
- Tax Audits: Siem Reap tourism business will not be subject to tax audits for the tax years 2020 to 2023 with the same applying to their Phnom Penh, Sihanoukville, Kep, and Kampot for the 2020 to 2022 tax years.
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