Tax Insight: Implementation For VAT On Nontaxable Supplies
By B2B Cambodia
on
On 25 May 2017, the General Department of Taxation (GDT) issued Prakas No. 559 relating to VAT for non-taxable supplies in accordance with Article 57 of the Law on Taxation (LoT) which is amended by the Law on Financial Management for 2017.
The purpose of Prakas 559 is to set out clearly the goods or services which are the deemed non-taxable supplies for the purposes of Article 57 of the LoT in order to stimulate economic activity and reduce the cost to citizens on the use of goods or services necessary in everyday life. Usually, tax registered entities charge VAT at the rate of 10% on the goods or services they provide. However, the LoT provides for certain circumstances where entities do not need to charge VAT. Prakas 559 clarifies these circumstances.
Expanding on the list of non-taxable supplies provided by Article 57 of the LoT, Prakas 559 provides for the following as non-taxable supplies:
- Public postal services
- Hospital, clinic, medical and dental services and the sale of medical and dental goods incidental to the performance of such services
- The service transportation of passengers by a wholly state owned public transportation system
- Insurance service
- Primary financial services
- The importation of personal which are exempt from custom duties
- Non profit activities in the public interest
- Education services
- Electricity and water supplies
- Unprocessed agriculture products
- Solid and liquid waste removal or collection services
- 1. “Primary financial services” (which had previously been undefined) refers to any financial service that derives profit from the following:
- Money deposit operations and the provision of credit or loans, but excluding service fees related to the provision of credit or the loan
- Trading of securities or other financial instruments, and clearance and settlement services with respect to the Cambodia Securities Exchange
- Money exchange services
- Surety services
- Trading of unprocessed gold