Full Review of the EuroCham Cambodia Tax Forum 2016
On September 21, 2016, over 400 people attended the EuroCham Cambodia Tax Forum, our most successful event to date! Finance managers and small business owners were able to receive guidance on the challenging subject of tax compliance from Cambodia's top experts. The day began with H.E. Kong Vibol, Director of General Dept of Taxation informing the public of changes within his department, and was followed by seven sessions led by experts from the GDT and top tax, audit, and legal firms.
This page provides a brief summary of each session and panel, while the links below contain full write-ups of each session.
SUMMARY: TAX FORUM PANELS AND SESSIONS
EuroCham Chairman Mr. Arnaud Darc commended recent reforms initiated by Cambodia’s tax authorities, in particular the abolition of the Estimated Regime, which will contribute to modernize the Cambodian economy and to further improve the business environment through fairer competition. He also expressed appreciation to the Ministry of Economy and Finance and to the General Department of Taxation for their collaborative approach and willingness to engage the EuroCham Taxation Committee on recommendations raised within the White Book.
H.E. Mr George Edgar, EU Ambassador to Cambodia, congratulated the Ministry of Economy and Finance on their outstanding implementation of their Revenue Mobilization Strategy and commented on the importance of such initiatives to enhance fiscal discipline as Cambodia transitions out of least-developed-country status.
H.E. Kong Vibol, Director General of the General Department of Taxation, welcomed the high turnout to this important forum and provided attendees with an overview of recent achievements of the GDT including consistent annual growth in revenues, abolition of the Estimated Regime, classification of taxpayers, simplification of accounting rules for small taxpayers, simpler tax registration requirements, fiscal assistance to specific industries, and the recent Double Taxation Agreement with Singapore. His Excellency encouraged attendees to take this opportunity to address their questions to the 15 GDT officials that he had asked to join the forum. View the full write-up of the opening remarks. View full transcripts of opening remarks here
RECENT TAX CHANGES AND FOLLOW-UP TO WHITE BOOK RECOMMENDATIONS
Mr. Anthony Galliano began by talking about how the GDT’s 2016 Law on Financial Management has significantly increased the government’s tax revenue and how it has eliminated the competitive advantage of the Estimated Tax Regime . After this, he outlined how small, medium and large taxpayers will be categorized under the new law and how they will be expected to invoice in the future. He then touched on how the GDT responded to recommendations outlined in EuroCham’s White Book. He stated that EuroCham’s recommendations regarding tax registration and VAT were very well received. View the full session transcript here
KEY TAX ISSUES FOR SMALL TAX PAYERS
Dr. Chhiv Kimsroy of Deloitte started the presentation by discussing how the introduction of a Simplified Accounting Format (SAF) would work in Cambodia. She went into great detail about how a SAF would affect SME tax compliance activities and how it would affect tax on profit in particular. Whilst doing she also mentioned the impact it would have on VAT, withholding tax and tax on salary. She concluded by outlining how the SAF would encourage small taxpayers to comply with tax regulation and how it would encourage fair competition within Cambodia. View the full write-up on the SME Tax Issues session
RECENT TAX CHANGES AND KEY TAX ISSUES - PANEL DISCUSSION
The first panel discussion was focused on Recent Tax Changes & Key Tax Issues, with the participation of senior officials from the GDT, financial services experts, and management from tax-paying businesses. H.E. Mr. Vann Puthipol, Deputy Director-General of the GDT, highlighted the efficiency gains for the GDT in bringing the tax system into the self-assessed regime in line with most other countries, provided details of the incentives that the GDT is putting in place to encourage smaller businesses into the real regime, and emphasized the Department’s forward-looking policy towards new registrants that need not fear being penalized for previous non-compliance. Moderator Mr. Anthony Galliano asked taxpayers which regulations have proven difficult to address, which prompted discussion of the VAT Refunds process, treatment of fringe benefits, and interpretation of specific terms within the Law on Taxation such as the determination of resident status. When asked what would come top of their ‘wish list’, participants commented on the benefits of enhanced communication between the GDT and taxpayers. GDT officials responded positively and highlighted to all attendees at the Tax Forum the availability of free training workshops through the National Tax School to help specific industries and business associations to better understand the Kingdom’s tax regulations and tools. View the full session write-up
VALUE-ADDED TAX - COMMON ISSUES
Mr. Clint O’Connell started his presentation by saying the most common issues affecting VAT are invoicing requirements, refunds and exported services. He went into great detail about how Instruction 1127, released in January 2016, has affected invoicing activities in Cambodia and did so through showing a number of templates. He then stated that if a company has excess VAT input for three consecutive months or more that they could then apply for a refund. Mr. O’Connell concluded his presentation by talking about zero-rated services and overseas precedent. He made it clear that if a taxpayer in Cambodia exports goods overseas that they will be zero-rated for VAT purposes. View the full write-up
Mr. Chum Socheat, Tax Manager at R&T Sok & Heng, provided an overview on the Kingdom’s Withholding Tax system, which he described as “short in the law but complex in practice”. Having outlined the rules and applicable tax rates within his core presentation, Mr. Chum took questions from the audience such as how to determine the rate of withholding tax when contracting foreign companies for services within Cambodia, and whether withholding tax should be due on a commission paid to a foreign sourcing agent. View the full write-up
TAX DISPUTE PROCESS
Mr. Vann Sinat, Tax Manager at Bun & Associates, talked attendees through 9 key points to be able to comfortable manage the Tax Dispute Process in Cambodia. Recognizing that it can be frustrating to go through the process without knowing your legal rights, Mr. Sinat outlined the legal sources of the dispute mechanism, the types of audit that companies can be open to and the conditions that must be met in order for an audit to be legitimately undertaken, the applicable timelines and the possible penalties that companies can incur for late payments or understating profits. View the full write-up
TAX AUDITS AND TAX DISPUTES - PANEL DISCUSSION
The final panel discussion of the day focused on tax audits and tax disputes. The panel was asked straight away whether thought there was too many tax audits taking place in Cambodia. They unilaterally responded by saying that having overlapping initial, limited and comprehensive tax audits was a strain on government resources. They then touched on the fact that an assessment management system was needed. The next question implored the panel to discuss the issues associated with related-party transactions. This question gave rise to Mr. Puthipol explaining the fact that the GDT was in the process of creating transfer-pricing guidelines. The final question posed to the panel asked them to discuss the problems associated with withholding tax. The panel stated that it would be wise for the GDT to introduce a tax cap, particularly for those working in the garment industry. View the full write-up
DOUBLE TAX AGREEMENT (CAMBODIA-SINGAPORE)
Mr. Jack Sheehan, Tax Partner at DFDL, talked through the content and consequences of Cambodia and Singapore’s recent Double Tax Agreement. This type of bilateral treaty is quite common globally though is the first of its kind for Cambodia. In practice they held to reduce the need for withholding taxes in transactions involving companies from each State, to define thresholds determining the types of income that can be taxed by each State, and to provide a framework for information-sharing amongst the tax authorities of the two countries. Providing detailing information about specific articles within the DTA, Mr. Sheehan highlighted in particular how resident taxpayers within Cambodia may benefit from the treaty by registering a holding company in Singapore to control subsidiaries across ASEAN countries, and likewise how European investors interested in Cambodia could reduce their tax burden by investing via a Singaporean subsidiary. View the full write-up
TAX PROFESSIONALS QUALIFICATIONS AND REQUIREMENTS
Mr. Casey Barnett started his presentation by talking about CamEd and the need for people to be more proficient in issues related to tax. After doing this he discussed CamEd’s “Diploma in Cambodian Tax” certification and the benefits associated with it. He made it a point to mention the fact that the certification was becoming increasingly important for those interested in becoming Certified Public Accountants in Cambodia and that the National Accounting Council was responsible for certifying the diploma. View the full write-up
Mr. Galliano began by saying thanks to the GDT, EuroCham and the media. After this, he briefly discussed the main themes that were covered during the forum and reflected on the advancements that were made by the government with regards to tax collection. He mentioned the fact that there was a 20% increase in tax collection this year and that tax information was becoming increasingly accessible online. He then touched on the importance of the GDT and EuroCham working together on a memorandum of understanding that will be imminently signed.
TAX FORUM SESSIONS