I– Introduction
In 2021 two regulations launched regarding VAT on E-Commerce as below:
- Sub-Decree No. 65 dated April 8th, 2021 on implementing the VAT on E-Commerce, and;
- Prakas No. 542 dated September 8th, 2021 on rules and procedures for implementing the VAT on E-Commerce Transactions.
These regulations apply to all non-resident taxpayers who do not have a permanent establishment in Cambodia business activities and civil activities involving the purchases, sales, rents, and exchanges of goods or services via an electronic system.
The Prakas No. 542 will be in effect April 1st, 2022 onward, according to Notification No. 776 GDT issued on January 17th, 2022.
II– Scope
The regulations on E-Commerce apply to all non-resident taxpayers supply of digital goods of services or any e-commerce activity via e-system from oversea into Cambodia and resident taxpayers who use this supply of digital goods or services or any e-commerce activity from non-resident taxpayers.
III– Registration for Simplified VAT
The non-resident taxpayers provide digital goods / service / e-commerce activities into Cambodia shall register a Simplified VAT within 30 days if the annual turnover met from 250 million riels (US$ 62,000.00) or three (3) month consecutive period completed in the current calendar year meets from 60 million reals (US$ 15,000.00).
The Simplified VAT application is only used for the VAT obligation purpose. The non-resident taxpayer can apply the required form and documents by Khmer or English language for registering the simplified VAT through an e-registration via website http://www.tax.gov.kh or use the services of registered tax service agents. The required documents included:
- VAT application form;
- Oversea tax registration certificate of non-resident taxpayer;
- The valid ID card / passport of the owner or representative person;
- Two passport size photos of the owner or representative person;
- Bank account confirmation issued / printed by the bank of the non-resident taxpayer;
- 400,000.00 Riels (US$ 100.00) for the Simplified VAT registration;
- 100,000.00 Riels (US$ 50.00) for updating the information of the taxpayer, such as amendment of address, owner / representative personally, or name of the enterprise.
The Simplified VAT registered non-resident taxpayer should be received the documents as listed below from the tax administration after 7 to 10 working days since submitted all required forms and documents:
- Simplified VAT Certificate;
- Tax Registration Card;
- Notification of the tax obligation.
IV– Tax Obligation
1. Simplified VAT Taxpayer
The taxpayer holding the simplified VAT shall file a monthly VAT return using form NR-VAT01 including the listed supplies / sales information.
- The nonresident taxpayer shall collect 10% VAT of the invoice price for the supplies to consumers in Cambodia (B2C).
- The non-resident taxpayer shall not collect 10% VAT from the resident taxpayer who doesn’t settle the payment from their registered company’s bank account (B2B). If the payment is not settled from the company’s bank account, this transaction shall consider as a supply from B2C as mentioned above.
The nonresident taxpayer can pay the collected VAT via any local partner banks of the GDT.
2. Resident Taxpayer
Resident taxpayer uses digital goods, services, e-commerce activities from non-resident taxpayer, shall collect the VAT at rate 10% to pay and file VAT monthly tax return under Reverse Charge on behalf of nonresident taxpayer by using from NR-VAT02 whether the non-resident taxpayer is not registered as simplified VAT in Cambodia. The amount of Reverse Charge paid shall be allowed to be an input VAT credit forward.
An input VAT credit forward can be used for the amount of Reverse Charge paid.
V. Exempt from Tax Obligation
- Starting from Prakas 542 MEF, the reverse charge will be exempted for a period of five (5) years for small, resident taxpayers.
- The Simplified VAT registered nonresident taxpayer shall be exempted from the obligation of paying the Patent Tax.
VI. Application of Withholding Tax on Simplified VAT Registered Nonresident Taxpayer Supplies
A simplified VAT registered nonresident taxpayer can only supply e-commerce goods or services to consumers in Cambodia. Withholding tax (WHT) is a type of tax that is withheld by a resident taxpayer from a payment made to a nonresident taxpayer. WHT is applied to certain types of income, such as income from services, royalties, and interest. The WHT rate for nonresident taxpayers in Cambodia is 14%. The simplified VAT registered nonresident taxpayer is not subject to WHT on their e-commerce supplies to consumers in Cambodia, as these supplies are subject to VAT. The simplified VAT registered on-resident taxpayer is only used for collecting VAT purposes.
VII. Issuing the Invoice
The simplified VAT registration taxpayer shall issue the supply / sale invoice containing to their consumers and resident taxpayer as below:
1. Details included in the invoice to consumers:
- Company’s name and Identification Number;
- Invoice number;
- Issued date;
- Address in Cambodia and email of the customer;
- Goods and services;
- Unit;
- Unit price;
- Total price;
2. Details required in the invoice to resident taxpayers:
- Company’s name and Identification Number;
- Invoice number;
- Issued date;
- Company name and Identification number of the customer;
- Address in Cambodia and email of the customer;
- Goods and services;
- Unit;
- Unit price;
- Total price.
The nonresident taxpayer can pay the collected VAT via any local partner banks of the GDT.
VIII. De-registerer from the Simplified VAT Registration
A simplified VAT registered nonresident taxpayer who wishes to cease e-commerce supplying into Cambodia must settle all outstanding VAT obligations to the tax administration before submitting a request letter to the General Department of Taxation. The request letter for de-registration of the simplified VAT registration must be submitted within 15 days after the cessation of e-commerce activities of goods or services into the Kingdom of Cambodia.
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations. For more details or any question related to the Tax on E-Commerce in Cambodia, please contact our professionals via [email protected].
TABLE OF CONTENTS
| * | Introduction |
| * | Scope |
| * | Registration for Simplified VAT |
| * | Tax Obligation |
| * | Exempt from Tax Obligation |
| * | Is Withholding Tax Applying for the Simplified VAT Registered Non-resident Taxpayer Supply? |
| * | Issuing the Invoice |
| * | De-register from the Simplified VAT Registration |
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