1. Introduction

Most individuals living and working in Cambodia are aware that they have to pay tax on their salaries. As the obligation to declare this tax rests with the employer, most individuals do not give it much further thought.

2. Definition of Salary Tax

Tax on Salary is a monthly tax imposed on the salary that has been received within the framework of fulfilling employment activities (Article 41, Law on Taxation). Whether a person is an employee or an individual earning profit depends on “the degree of subordination to the employer” (Section 1.2 of Prakas 1173 on Tax on Salary). The governing Prakas outlines four criteria to assist in determining this. If two of these four criteria are met, an employment relationship exists: The person will be paid as long as he appears at a designated place to perform tasks outlined in a general (written or oral) agreement;

After more than five decades, foreign banks will again be able to open up branch offices in Myanmar as part of the government’s financial reforms aimed at developing the country’s banking sector. At present, there are 43 foreign banks with representative offices in Myanmar (See graph below).

But they are restricted from conducting any type of financial activities in the country. Their activities are limited to such things as collecting data, studying the local financial scene, and marketing. This will change, however, as Myanmar now plans to issue up to ten foreign bank branch licenses later this month.

In 2011, the Central Bank of Myanmar (“CBM”) began liberalizing and allowing private banks to do foreign exchange currency transactions. Th en, in 2012, the CBM floated the nation’s currency, the kyat, which better facilitated international trade, especially agricultural exports. As of 2013, however, the nation’s 24 banks still had combined assets of only $ 23 billion dollars.

The Myanmar government has long recognized the need for the involvement of foreign banks and foreign investment to help modernize the nation’s financial system. As a growing economy, Myanmar desperately needs access to capital.

Young entrepreneurs and agriculturalists need access to long-term credit in order to open new businesses and farms. Foreign banks would be the logical place to look for a supply of much-needed capital. Local banks, however, have pushed back hard against the CBM’s suggested reforms in the foreign bank licensing law. Indeed, a strong parliamentary committee has been formed to oppose foreign banks operating in Myanmar altogether. And while the effort to forbid foreign banks from operating in Myanmar under any circumstances has failed, the strong lobby efforts have resulted in a very restrictive bank licensing law.

1. Introduction

Labor Unions that are legally established have a number of rights under Cambodian law. One of the important rights is the right to strike which has been increasingly exercised by Labor Unions. The strike has become an instrument for workers to demand from employers and the government the improvement of working conditions in general and an increased minimum wage in particular. The recent strikes conducted by workers at the end of 2013 and early 2014 against the decision of the Labor Advisory Committee to increase the minimum wage by 100 dollars instead of 160 dollars as demanded by the workers have drawn attention to the right to strike in Cambodia from the international community and investors.

2.What are the legal conditions for the formation of labor union?

An union can be established by employees. The founders of the Union must submit a request, the statute, and lists of names of those responsible for management and administration to the Ministry of Labor and Vocational Training for registration. In the case that the Ministry of Labor and Vocational Training does not reply within two months after receiving the application form, the union is considered legally registered. A copy of the submitted documents shall be sent to the Department of Labor Inspection, the Office of the Council of Ministers, the Ministry of Justice, and to the Ministry of Interior.

Following increased strikes and the clashes with the police and the protests which caused deaths and injuries, the government suspended the creation of labor unions until a new trade union law is adopted and implemented¹ expected by the end of 2014. The suspension of the freedom of association by the government until the new law on trade unions may be a sign of tighter regulation of unions under the new law on trade unions.

The opponents to the current draft of the law on Trade Unions argue that it imposes strict conditions for the creation of Unions and the suspension and de-registration of unions by the government² if their activities are deemed illegal.

In contrast, the proponents of the current draft law claim that the new law will comply with the ILO’s Convention 87 on the Freedom of Association and improve the current industrial relation³.

The new law on Trade Union will set out conditions, procedures for the formation of labor unions, and rights and obligations of labor unions4.⁴.

This law may be an instrument to adjust the existing power relationship between employer and employees through tighter control of labor unions by the government.

1. Introduction

The process of dissolving a company in Cambodia is important and requires just as much preparation as opening a company and, for legal and tax reasons, this process must be completed with care. Indeed, those who fail to properly dissolve a company expose themselves to lawsuits and liability for back taxes, fines and other penalties. This report explains the proper procedures for dissolving a corporation in Cambodia.

2. Liquidating a Company

Liquidation (also referred to as dissolution) is the process whereby a company is brought to an end and the property and assets are redistributed. There are various reasons why the corporations’ shareholders might want to dissolve a company including, for instance, financial difficulties¹. With shareholder approval, a company may request dissolution in accordance with the Ministry of Commerce’s dissolution and tax liquidation procedures.

3. Tax-related Matters

In the case of a voluntary dissolution, before notifying the Tax Office, a company needs to liquidate assets and liabilities that are subject to the Value Added Tax (VAT). A company also needs to write off or recover receivable balances and pay offsecured and unsecured creditors. Companies also need to file final salary and fringe benefit taxes for employees, VAT, withholding taxes, prepayment of profit taxes, and annual taxes on profi ts (including capital gains). Finally, companies must write offany expenses and recover the VAT input balance if any input credit is to be carried forward².

Within 15 days of the cessation of business, companies must submit a request to the Tax Offi ce to dissolve its business. Th e request must take the form of a letter the appropriate Tax Branch Offi ce providing 1) the reason for dissolution, 2) two copies of the business dissolution application form, 3) an original copy of the latest Patent Tax Certifi cate, 4) a copy of the latest monthly tax and annual tax returns, and 5) the original VAT Certifi cate for audit purposes³. Finally, a stamp duty of one million KRW (approximately USD 250) must be included with the request⁴.

Next, the Head of the Tax Office issues a tax audit notification letter specifying the date of the audit, the names of the auditors handling the audit, and identifying for the taxpayer any specific documents that must be prepared for an audit. Documents identified by the Tax Office for the audit generally include monthly and yearly tax returns, lease agreements, and any other tax-related documents. After the audit, the Head of the Tax Office issues a Tax Reassessment Notification Letter, explaining whether or not any taxes are owed.

In case no taxes are owed, the taxpayer must nevertheless submit a letter to the Tax Office formally acknowledging the findings of the Tax Office, after which the Head of the Tax Office will issue a Tax Clearance Certificate for processing at the Ministry of Commerce (MOC).

In case taxes are owed, the taxpayer must also submit a letter to the Tax Office acknowledging and/or rejecting (either in whole or in part) the tax liabilities assessed. The letter must be sent within 30 days of receipt of the Tax Reassessment Notification Letter. If no response is made, the company shall be deemed to have accepted the tax reassessment. When a company accepts the results of the reassessment without challenge, the Tax Department will issue a fi nal tax reassessment notification letter. The taxpayer must then pay the total amount within 15 days. Upon payment, the Head of the Tax Branch will issue a Tax Clearance Certificate for processing at the MOC.

When a company rejects a tax reassessment it must submit a letter to the Tax Offi ce within 30 days of receipt of the reassessment putting forward a clear explanation, accompanied by evidence, of any alleged error. Taxes are due regardless of the merits of the taxpayer’s appeal and will be refunded only after a resolution has been reached between the auditors and the taxpayer or a final decision has been made by a court. At the conclusion of the process, the Head of the Tax Branch will issue a Tax Clearance Certificate for processing at the MOC.

1. Introduction

In the context of current growing international interest in the reforming economy of Myanmar and the continuing revision of its antiquated regulatory structure, international brands looking to enter this market must face the issue of how to best protect their valuable trademarks.

Complicating the matter, however, is the fact that Myanmar is poised to shift its trademark protections from its existing fi rst-to-use system based on colonial British statutes and case law to a brand-new fi rst-to-fi le system draft ed in cooperation with the World Intellectual Property Organization (WIPO). Th e change was initially expected to occur in 2013 but is now set for the summer of 2014.

Th is newsletter will explain in brief what these changes mean for foreign companies and investors and alert clients to what should be done before the shift takes place.

2. Signifi cant benefi ts for registering trademarks now under existing regime

Under the new Trademark Law any trademarks registered under the old regime will automatically continue to receive protection during a three-year transition period, which begins from the date the new Trademark Law comes into force. While trademark holders should re-register their trademarks under the new Trademark Law as soon as possible aft er it goes into eff ect, those trademark holders who have already registered their marks under the old regime will receive priority under the new system.

Under the system currently in place trademark holders have traditionally availed themselves of protection under Section 18(f ) of the Registration Act (Direction 13) by creating a “Declaration of Ownership,” which must be registered with the Offi ce of the Registry of Deeds and Assurances. Once a Declaration of Ownership has been registered it is customary for trademark holders to then publish a “Cautionary Notice” of the mark in a Myanmar newspaper of broad circulation.

Perfecting the above procedure establishes prima facie evidence of ownership of the mark, however, actual use of the mark in trade is still required for protection against infringement. Myanmar’s Constitution grants IP rights and refers explicitly to “[i]ntellectual property such as . . . trademarks,” Myanmar’s Penal Code both defi nes trademark (Section 478 & 479) and provides penalties against infringement (Section 482), while Myanmar case law off ers remedies for civil actions. Indeed, there are several recent cases where Myanmar Courts have provided remedies for major international brands such as Kentucky Fried Chicken (“KFC”), Pizza Hut, HBO, Marriot, and Dr. Scholl’s. Th erefore, while better protection is expected under the new law, the current regime is not without remedies for trademark infringement.

1. Introduction

1.1. Until recently1 , media articles drew the attention of national and international professionals to cases relevant to Cambodian maritime law, to be more specifi c, cases of fi shing vessels fl ying Cambodian fl ags. In the legal arena, there have been certain cases of maritime liens and of vessel transfers as well.

1.2. In general, maritime activities, transactions and cases are of a very particular nature, oft en requiring in-depth analysis of all related elements. Unfortunately, Cambodia’s maritime legal framework is still far from being comprehensive; it is very much in its early stages of development which opens a path to research – but which does not enable us to undertake such an in-depth analysis at the moment.

Th is newsletter highlights some recent topics of: classifi cation of vessel, ship registration, ship transfer and maritime lien.

2. Classifi cation of vessel

2.1. Classifi cation of vessel is not the most debated topic. But if we look a little more carefully, it is the fi rst key question in the way that determination of applicable law starts with providing a satisfactory answer to whether a vessel is movable or immovable property. Some ships navigate, some others do not.

2.2. Despite the fact that there are at least six applicable laws and regulations in this area, those laws oft en time do not provide for an undoubted classifi cation of the vessels. Using unclear language, some laws tend toward the classifi cation of “movable”, while some others have a tendency toward the classifi cation of “immovable” for vessels. As an example, the 1992 Land Law considers ships with capacity of more than 30 tons as immovable, while a 2003 Prakas2 stipulates that vessels constitute a particular class of movable.

2.3. With such uncertainty, there is a need to weigh both sides. Time-wise, the 2007 Civil Code is the latest legal text applicable (being implemented in 2012). While this code does not provide for a clear distinction, it tends to apply immovable rules on the vessels.

Inter-Country Adoption in Cambodia

Since 2001, many countries, including the United States, the United Kingdom, France, and Australia, have banned their citizens from adopting children from Cambodia. Weak laws and lax enforcement created a grave human trafficking problem. The Royal Government of Cambodia has since instituted reforms to prevent child trafficking and to comply with Cambodia’s obligations under the Hague Convention on Protection of Children and Cooperation in Respect of Inter-Country Adoption. The Convention requires the establishment of one or more Central Authorities per country to manage inter-country adoptions.

On December 3 2009, Cambodia passed its Law on Inter-Country Adoption to protect the basic rights and interests of children adopted by foreign citizens. One major change from the former adoption practice is that all inter-country adoptions must now be handled by authorized adoption agencies under the auspices of the Central Authority. Unauthorized private companies or orphanages can no longer process inter-country adoptions directly. The procedure under this new Law can be summarized as follows:

Commercial arbitration: Legislation and statutory body

Commercial arbitration is a means by which disputes arising out of trade and commerce can be resolved in accordance with the voluntary agreement of parties through a process other than litigation at a court of competent jurisdiction. In Cambodia, dispute resolution through the court system can be an expensive and time-consuming affair. This has often resulted in international businesses choosing to forgo the litigation process and writing off losses. The Royal Government of Cambodia, in accordance with its WTO accession commitments and its constitutional mandate of promoting rule of law, introduced and passed the Commercial Arbitration Law in 2006. This legislation establishes a regulatory framework for the private arbitration of business disputes in accordance with international practices.

The Commercial Arbitration Law promulgated the creation of a National Arbitration Center with the help and guidance of the Ministry of Commerce. Subsequently, a sub-decree was passed by the Council of Ministers in 2009 on the organization and functioning of this body. The Center was formed in the year 2010 and has recently announced the election of its executive board members. The Center will become an independent statutory body upon the nomination of its office-bearers. The body will have a non-exclusive but prominent role in promoting the process of arbitration, training of arbitrators and providing commercial arbitration services in the country.

Statutes and International Treaties

As of February 2013, only collective labour disputes are subject to arbitration in the Kingdom. The Arbitration Council was similarly created under the auspices of the Labour Law of 1997. In July 2001, Cambodia adopted the “Law on the Approval and Implementation of the United Nations Conventions on Recognition and Enforcement of Foreign Arbitral Awards” and in March 2006, the “Law on Commercial Arbitration”, as referred above, was passed in conformity with the UNCITRAL Model Law.

In principle, parties to an agreement, whether foreign or resident in the Kingdom, reserve the flexibility to determine the terms and conditions in accordance with their requirements. However there are certain exceptions where only Cambodian courts retain original and appellate jurisdiction. The Law on Commercial Arbitration applies to both domestic and international arbitration allowing parties to choose foreign arbitration institutions. The Law contains detailed and substantive requirements for procedures to be followed during arbitration proceedings. The Labour Law is applicable for domestic arbitration resulting from labour disputes.

Cambodia is a party to the United Nations Convention of Recognition and Enforcement of Foreign Arbitral Awards in 1958 which came into force through the adoption of the Law on Approval and Implementation of the United Nations Conventions on Recognition and Enforcement of Foreign Arbitral Awards.

The Cambodian Code of Civil Procedure does not apply to arbitration, however, when an arbitral award comes into effect, the execution of the awards must comply with the provisions of the Code of Civil Procedure.