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.