Cambodia | 2023 Annual Compliance Obligations

With the 2022 year quickly coming to an end, we take this opportunity to remind our clients and readers of the annual compliance obligations for enterprises in Cambodia. With each year that passes there seem to be more compliance obligations, and the latest 2023 compliance requirements continue this trend.

With that in mind, we have provided below what we believe are the most important annual compliance requirements that enterprises in Cambodia should be aware of. Compliance requirements may vary depending on a number of factors. In all cases, we encourage you to seek expert advice from a professional advisor about the compliance requirements that may be applicable to your enterprise.

2022 Tax on Income Return

The standard 2022 tax year in Cambodia runs from 1 January to 31 December 2022. Electronic-filing for the 2022 annual Tax on Income (TOI) declaration and associated payment receipt of Tax on Income or Minimum Tax with the General Department of Taxation (GDT) must be completed by31 of March 2023 or within three (3) months after the end of the tax year for enterprises that have a non-standard tax year.

Those self-assessment taxpayers (taxpayers who are registered with the GDT) that have local branches are required to file a consolidated 2022 TOI declaration attaching the financials of the respective local branches with the return. Self-assessment taxpayers that have both Qualified Investment Project (QIP) and non-QIP activities are required to submit their annual 2022 TOI return in accordance with Prakas 1127 MEF.P dated 11 October, 2016.

All self-assessment taxpayers filing annual 2022 TOI returns with the GDT are required to include a balance sheet, profit-and-loss account and an annexed list of any related party transactions carried out during the 2022 tax year.

2022 Local Transfer Pricing File

The prevailing Cambodia transfer pricing regulation, Prakas No. 986. MEF.P. dated 10 October 2017, requires self-assessment taxpayers that have related party transactions (RPTs) during the 2022 tax year to comply with two annual requirements:

• Completion of a transfer pricing declaration which is annexed to the 2022 annual TOI return and submitted to the GDT;
• Completion of a 2022 local transfer pricing file, the completion of which is acknowledged in the 2022 TOI return.

Some important points that self-assessment taxpayers should pay attention to:

• A local transfer pricing file that has been prepared for an earlier tax year does not in itself meet the requirement for the 2022 tax year. In other words – a stand-alone local transfer pricing file needs to be prepared for each tax year for those Cambodian entities that have ongoing or new RPTs in 2022.
• Self-assessment taxpayers should also be aware that transfer pricing benchmarks used in a local transfer pricing file should be tested annually and updated when appropriate. It is also recommended that the benchmarking analysis be refreshed in full every three (3) years.
• Penalties may apply for non-compliance with the requirements set out above. Perhaps more importantly not having local transfer pricing documentation in place to support a taxpayers RPT’s allows the GDT to more easily argue that payments that are made or received do not follow the arms length principle and to then re-assess taxes, penalties and interest accordingly.

2023 Patent Tax

All self-assessment taxpayers operating in Cambodia are required to register and pay their 2023 Patent Tax with the GDT by31 of March 2023 for each business activity that they carry out. The amount of Patent Tax payable in 2023 is dependent on the particular classification of the enterprise under the self-assessment regime of taxation. 

Click here to view the full article.