Introduction: Monthly Tax Filing Alert E-filing system

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Introduction: Ownership over Immovable Property in Cambodia

The Constitutional Law in Cambodia only allows natural persons or legal entities with Cambodian nationality to own lands or immovable property. A Cambodian natural person refers to those who are citizens of Cambodian and hold Cambodian nationality. According to Nationality Law of Cambodia, the Cambodian Nationality can be obtained through Citizenship by Birth, Full Adoption, Marriage or Nationalization. On the other hand, a Cambodian Legal Entity (the “Entity”) refers to an enterprise which is registered in Cambodia. A majority shareholder (the “Cambodian Shareholder”) with 51% shares or more must be Cambodian natural person(s) or Cambodian legal entity(s), while 49% shares or less might be hold by a foreigner(s) or foreign entity(s) (the “Foreign Shareholder”).

These share percentages shall be stipulated in the Article of Incorporation. The law does not recognize any private agreement between shareholders which are against this provision. Thus, any change of share, which superseded the Entity’s nationality, shall be informed to the competent Ministries or Institutions…

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Introduction: Double Tax Agreements<

A double tax agreement (“DTA”) is a bilateral agreement between two countries in order to avoid the double tax and the prevention of fiscal evasion with respect to taxes on income or on elements of income.
Individuals with a “permanent residence” and with full and unlimited tax liability in either one of the contracting countries may be entitled to exemption/reduction from taxation of income and property according to provisions of the respective agreements, in absence
of which the income would be subject to double taxation.

Tax benefits under DTA for payments can take place in two (2) ways:
• Avoided double tax payments or a reduced tax rate on respective payments;
• Deducted withholding tax rate payments.

The existing taxes covered under DTA’s agreement may include the following, depending on the signatory countries:
• Taxes on income;
• Gains from the alienation of movable or immovable property;
• Taxes on wages or salary;
• Withholding tax on dividends, interest, royalties, technical service.
The main feature of DTAs is that the standard rate of withholding tax can be reduced for all payments to non-resident taxpayers
from 14% to a maximum of 10% of the gross amount in most cases, including withholding tax on dividends, interest, royalties and technical services.
In addition, income of a Contracting State that is a resident of other Contracting States may be taxed in other jurisdictions, but by
virtue of the effectiveness of DTAs, the tax paid is provided as a tax credit in the jurisdiction.

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Introduction: Law on E-Commerce

In the past years, Digital Economy, especially E-Commerce and online shopping have been increasing significantly.
The mobile phone subscription increases from 12 million in 2014 to 20.7 million in April 2020 whereas internet subscribers increases from 5 million in 2014 to 15.2 million in April 2020. Digital
payment, sharing economy, gig economy, either in the form of B2B, B2C or C2C as well as digital platforms continue to have rapid growth in Cambodia.
The Royal Government of Cambodia has put the E-Commerce development as a priority in its development strategies agenda such as National Strategic Development Plan 2019-2023 and Rectangular strategy phase IV.

In recent years Myanmar has been hailed as the “final frontier” for investors in Asia. Foreign direct investment has increased significantly since the nation’s return to a civilian government in 2011 after sixty years of military rule and failed economic policies. The United States, which once imposed severe trade restrictions against the country, has since become an enthusiastic trading partner with US companies investing US$612 million in Myanmar since 2012. The Myanmar Investment Commission (MIC) has received around US$ 500 million a month so far for the fiscal year.

However, Cambodia did not have an exhaustive set of law and regulations regarding E-Commerce. The Civil Code provided general rules with regards to contracts and the Criminal Code provided for some rules in relation with fraud.
In this regard, on November 2, 2019, the Law on E-Commerce (the “E-Commerce Law”) has been promulgated, and became effective on May 2, 2020, initiating a profound change in the
Cambodian legal landscape. The purpose of the E-Commerce Law is to manage e-commerce, secure commercial and civil transactions in electronic system and provide confidence to the
public in using electronic communications (Art. 1). Basing on the UNCITRAL Model Law on Electronic Commerce (1996), this Cambodian E-Commerce Law brings important changes to the Cambodian business legal framework by regulating electronic
communications and strengthening consumer protection in this context of Industrial Revolution 4.0.

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Introduction: The Berne Convention for the Protection of Literary and Artistic Works (1886)

Cambodia has just ratified the Berne Convention (the “Convention”) that protects the authors’ works and their rights. A new regulation or law to implement the Convention will be issued soon.
This Convention is based on three basic principles:

* Principle of national treatment: Any works originated in one of the Contracting States shall receive the same protection in each of the other Contracting States.

* Principle of automatic protection: The protection is not subject to the fulfilment of any formality.

* Principle of independence of protection: Protection is independent of the existence of protection in the country of origin of the work. However, if a Contracting State provides for a term of protection longer than the minimum prescribed by the Convention and the work ceases to be protected in the country of origin, the protection may be refused if it has ceased in the country of origin”.

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Introduction: INVESTING IN MYANMAR

Myanmar has a geographically unique and strategic location. The country is situated at the crossroads between the world’s two most populous nations of China and India and reaches deep into Southeast Asia where it also shares borders with Thailand, Laos and Bangladesh. A natural hub with a low population density and a rich supply of arable lands and natural resources, Myanmar has the potential to become the fastest growing economy in the region and to once again take up its role as a Southeast Asian trading center.

In recent years Myanmar has been hailed as the “final frontier” for investors in Asia. Foreign direct investment has increased significantly since the nation’s return to a civilian government in 2011 after sixty years of military rule and failed economic policies. The United States, which once imposed severe trade restrictions against the country, has since become an enthusiastic trading partner with US companies investing US$612 million in Myanmar since 2012. The Myanmar Investment Commission (MIC) has received around US$ 500 million a month so far for the fiscal year.

In order to maintain an attractive investment climate the government has embarked on an ambitious series of reforms and incentives; and Myanmar has become an active member of international and regional investment organizations.

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Introduction

As many countries’ borders were being closed due the pandemic and flights cancelled all around the world, Cambodia is deeply feeling the impact on the tourism sector.

In 2019, the Kingdom of Cambodia welcomed 6.6 million of tourists, which represents an increase of 7% over 2018. The sector generated about US$5 billion and accounted for 12% of the Cambodia’s Gross Domestic Product (GPD) and count around a million employees.

Since the crisis, The Ministry of Tourism (MOT) predicted that Cambodia could potentially loose around US$850 million which translates to about 3.5 percent of the county’s GDP and in a 10% loss of revenue from the tourism sector. The Royal Government of Cambodia (RGC) was quick to address the issues and implemented many regulations in order to relieve the pressure on the tourism’ actors.

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Introduction

On September 21, 2018, the Ministry of Labor and Vocational Training (MLVT) issued a Prakas (Declaration) on Seniority Payment (“Prakas No. 443”) which amended the Article 89 of the Labor Law. Under the Prakas No. 443 which is effective as from 2019 onwards, all FDC employees are provided severance indemnity which at least equal to five percent of employees’ wages to be paid during the length of contract. UDC employees are entitled to receive a seniority indemnity equal to 15 days of their wages and other benefits per year starting from 2019 onwards. It is worth noting that these employees shall also receive the back-seniority indemnity before 2019, equal to 15 days of their total seniority as well. For UDC employees, working in the textile, garment, or the footwear sectors, the back seniority indemnity shall equal to 30 days of total seniority in every one year.

However, numerous regulations have supplemented, clarified and changed the regime laid out in the Prakas no. 443.

On March 22, 2019, the Ministry of Labor and Vocational Training issued the Instruction no. 042 to reduce the number of the payment of back pays of seniority who are not in garment, textile and footwear sector from 15 days to only 6 days per year. In addition, on June 10, 2019, the Ministry of Labor and Vocational Training issued the notification No. 057 regarding the calculation of back seniority indemnity before 2019 for garment, textile and footwear sectors. According to the notification No. 057, the payment of seniority indemnity is provided to employees only 15 days per year.

Regarding the payment of Seniority Indemnity before and from 2019 onwards, pursuant to the Instruction No. 042/19 regarding the delay payment of back seniority indemnity, from 2019 to the end of 2021, workers/employees shall be paid only the seniority indemnity on each current year which equals to 15 days per year. However, from 2022 onwards, workers/employees shall be paid both seniority indemnity before and from 2019 which equals 15 days + 6 days (7.5 days + 3 days shall be paid in June; and 7.5 days + 3 days shall be paid in December).

Important note: On April 7, 2020, due to the impact of Covid-19, the Ministry of Labor and Vocational Training postponed the back payment of seniority indemnity before 2019 and the payment of seniority indemnity for 2020 until 2021, in order to let the business be able to cope with the amount of money to provide.

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