Legal and Tax Updates

Issue: No. 010 P/24 – 31 May 2024

On 20 May 2024, the Ministry of Economy and Finance (the “MEF”) issued an Instruction No. 18412 GDT on the Implementation of Tax Incentives for Micro, Small and Medium Enterprises for the Development of Informal Economy (the “Instruction”).

The Royal Government of Cambodia (the “RGC”) has implemented the national strategy for informal economic development 2023-2028 to provide ensures and incentives to enterprises that conduct business in macro, small and medium as well as informal economies to participate in voluntary tax registration and participate to the implementation policy of the RGC.

Tax incentives shall be provided for micro, small and medium enterprises which is in formal economies with voluntary tax registration to conduct business in 4 priority sectors: (1) wholesale, retail and repair service (2) accommodation and food services (3) handcrafts and (4) agricultural cooperative.

Tax Incentives

Tax incentives for micro, small and medium enterprises for voluntary tax registration are as follows:

1. Micro Enterprises: the years 2023 to 2028 shall be exempted including tax registration fee, information update fee and tax registration identification card printing fee.
2. Small Enterprises: the years 2023 to 2028 shall be exempted for as follows:

• Penalty and tax debt related to business non-compliance prior to voluntary tax registration including payment tax amount, additional tax, interest and fines.
• Tax registration fee, information update fee and tax registration identification card printing fee.
• Patent tax of the year in which the tax registration is approved.
• Patent tax of 2 years after tax registration is completed in the year 2024 or 2025.
• Prepayment on income tax, income tax and minimum tax for 2 years after tax registration by counting from the year in which such tax registration is approved to the next fiscal year.

3. Medium Enterprises: shall be exempted for, during the years 2024 to 2025, as follows:

• Penalty and tax debt related to business non-compliance prior to voluntary tax registration including payment tax​ amount, additional tax, interest and fines.
• Patent tax for 2 years after registration is completed in the year 2024 or 2025.
• Prepayment on income tax, income tax and minimum tax for 2 years after the tax registration by counting from the year in which such tax registration is approved to the next fiscal year.

Voluntary Tax Registration

The voluntary tax registration shall be registered via CamDX or directly at the General Department of Taxation (the “GDT”) by filling the form 101 in accordance with the Prakas on Tax Registration and Taxpayer Information Update in force.

Disclaimer

The article is merely for general information purposes. It does not constitute a legal advice on the subject matter. If you have any questions or need any assistance, please feel free to contact us:

	NOEUM Sokvichhai, Partner, Managing Director sokvichhai.noeum@sithisak-lawoffice.com +855 12 826 785	Mr. Sokvichhai has more than 8 years of experiences in labour, corporate, commercial and investment advisory in Cambodia. He actively advices and assists various businesses in commercial, tax, and labour registration, business licensing, products registration & distribution, business recapitalization & restructuring, and mergers & acquisitions transaction. He also has particular experiences in advising collective investment fund and trust business, initial public offering, bond issuance, investment incentives & qualified investment project, and labour & employment related issues. Sokvichhai also assists major business in preparing various complex commercial agreements.
	Dr. CHHAK Limchheang, Partner, Head of Real Estate and Construction Practice Group limchheang.chhak@sithisak-lawoffice.com +855 89 813 160	He has several years of professional experiences in real estate-related transaction and construction sector in Cambodia. He has advised local and foreign clients on acquisition and disposal of residential, industrial and commercial properties, on commercial lease, factory perpetual lease, real estate joint venture development and FIDIC agreements. Recently, he led counsel to advise on both real estate and tax issues of real estate development project with an approximate investment portfolio of USD 40 million in Kampot Province. He is currently leading a legal counsel to advise a major domestic company in their joint venture property development with an investment portfolio nearly USD 200 million in Phnom Penh.

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