CONTRACT LAWS 2015
PROMULGATION OF LAW ON SPECIAL LEASE, Royal Kram № … (Royal Palace) … July 2015 (This Law is still pending, and was approved by the National Assembly on 7 July 2015)
The general rules of leases are found in the Civil Code, which do not sufficiently protect low-income lessees. The Law on Special Lease is intended to protect lessees with low-income, such as workers and students, against lessors who practice leasing as their career.
This Royal Kram requires special leases to be in writing and certified by a commune or Sangkat Chief, and requires that the lessor obtain the certification. Special leases shall have a term of not less than two (02) years. Any special lease having a term of less than two (02) years shall be considered as having a term of two (02) years.
The lessor has the right to terminate the special lease if the: (i) lessee fails to pay the rental fee for two (02) consecutive occasions without reasonable grounds; (ii) lessee uses and enjoys the benefit from the leased items for purposes other than those specified in the lease; (iii) lessee intentionally undermines the (public) order on multiple occasions, and materially affects the ordinary course of livelihood of the people living nearby; (iv) leased property requires major repairs or requires a (complete) new construction as instructed/ordered by a legitimate local authority.
For the period during which a special lease remains in force, the lessor may not increase the rental fee. The lessee retains the right to terminate the special lease at any time. A lease related to a rented room for lodging/accommodation purpose, which was entered into before the application of this law, continues in accordance with the substance of the lease until its expiry date.
FINANCE 2015
INSTRUCTION ON REGISTRATION OF FINANCIAL TRUST, Instructional Circular № 011 (MEF), 16 July 2015
This instruction provides the method for determining identity for trustee, trustor, and determination of trust balance for registration and annual trust balance.
Determination of Identity for Trustee: in accordance with article 5 of Sub-decree № 0476 ANKr.BK, dated 26 August 2013, on Financial Trust, trustee refers to a natural or legal person who maintains and manages a trust pursuant to financial trust registered at the Ministry of Economy and Finance. Trustee refers to natural persons, or banking institutions, micro-financial institutions, micro-financial operators, associations, national and international organizations who have obtained the right to maintain and manage the trusts. The right to maintain and manage a trust is based on an agreement involving the Royal Government and certain development partners for developing the banking and micro-finance sector for the purpose of serving beneficiaries.
Determination of Identity for Trustor: in accordance with article 5 of Sub-decree № 0476 ANKr.BK, dated 26 August 2013, on Financial Trust, trustor refers to the development partner (s) which has entered into an agreement with the Royal Government for the purpose of providing funds trust to trustees for the development of banking and micro-finance sector for the interest of beneficiaries. Trustor refers to the owner of the trust and has the right to create a financial trust letter.
This instruction further provides guidance on determining trust balance upon registration of financial trusts, determination of annual trust balances, and annual trust contributions.
GRANTING LICENSE AND MANAGING DERIVATIVE INSTRUMENT TRADING, Prakas № 004/05 (SECC), 2 July 2015
This Prakas aims at determine the rules and provisions in granting licenses and managing derivative instrument trading by setting the conditions for licensing, permissions and obligations of licensed companies and other relevant individuals for the purpose of guaranteeing a proper and transparent market, and protecting investors in compliance with the law on issuance and trading of non-government securities.
Licenses are to be issued by the general director of the Securities and Exchange Commission of Cambodia (SECC). Securities firms currently licensed by the SECC may apply for additional permission to become a central counterparty for derivatives trading in compliance with this Prakas. Company licensed to be a central counterparty in derivatives trading must conduct this business activity separate from its other activities.
TRANSPORTATION/TRAFFIC 2015
CONDITIONS AND PROCEDURES FOR REQUESTING LICENSE FOR CONDUCTING BUSINESS ON SECTOR OF ROAD INFRASTRUCTURE, ROAD MAINTENANCE, OPENING ROAD SECTOR LABORATORY, Sub-Decree № 94 (RGC) 22 July 2015
This Sub-decree promotes quality in construction, repair, maintenance, and development of road infrastructure in a sustainable manner, and aims to guarantee transparency, good faith, equity and effectiveness in the bidding participation process for road construction, repair, maintenance, and provision of road construction technical advisor services for all road infrastructure projects in the Kingdom of Cambodia.
This Sub-decree extends the scope of implementation on state entities which perform works related to road infrastructure, and persons who conduct business relating to road infrastructure, road maintenance, provision of technical advisor service for road construction, monitoring of road infrastructure construction and opening of road sector laboratories.
TRANSITIONAL FINE REGARDING OFFENSE AGAINST THE LAND TRAFFIC LAW, Notification № 85 (RGC), 8 July 2015
This Sub-decree has the stated aim of curbing/preventing offenses and land traffic accidents, maintaining land traffic order, and protecting human and animal lives, properties and environment. The objectives of this Sub-decree are as follows: (i) to promote awareness of land traffic law; (ii) to increase effectiveness for implementing the law on land traffic in order to improve order and safety in road trafficking; and (iii) to determine offense and amount of money to be fined in a transitional period.
TAXATION 2015
APPLICATION OF VALUE ADDED TAX (VAT) ON THE PRODUCTION AND SUPPLY OF PURIFIED WATER FOR PUBLIC CONSUMPTION, Prakas № 690 (MEF), 25 June 2015
The Ministry of Economy and Finance, on 25 June 2015, issued Prakas No. 690 (the “Prakas”) on the application of value added tax (“VAT”) on the production and supply of clean water for public consumption. The Prakas indicates that the production and supply of purified water to the public for daily consumption is considered as non-taxable supply.
However, the supply of (i) purified water for drinking, (ii) goods and (iii) services other that mentioned above is a taxable supply and subject to the standard 10% VAT. The Prakas also stressed that input VAT credits on the importation and local purchase of equipment and raw materials to produce clean water must be recorded in compliance with Articles 29 to 41 of the VAT sub-decree.
The definition of what constitutes a “supply of water to the public for daily consumption” is not clear. It is not apparent, for example, if the intention of the Prakas is to consider the sale of water (whether piped-in or bottled) to businesses should be considered a non-taxable supply. These issues may need to be the subject of formal consultations with the tax authority.
QUALITY/STANDARD 2015
PROVISION OF PUBLIC SERVICES AND IMPOSING TRANSITIONAL FINE IN CASH BY THE MINISTRY OF INDUSTRY AND HANDICRAFT, Joint Prakas № 717(MEF) 8 July 2015
The Ministry of Industry and Handicraft will carry out revenue collection from the public service fees for the benefit of the national budget.
This Joint Prakas includes, as an annex, a schedule of fees for public services provided by the Ministry of Industry and Handicraft. All revenue collections from public service fees and transitional fines in cash, pursuant
to this Joint Prakas will be provided with a receipt provided by the Ministry of Economy and Finance in line with the Prakas № 272 SHV.BrK, dated 17 March 2011, on the Implementation of Payment Receipt, and the Instructional Circular № 005 SHV, dated 17 March 2011, on the Management of Payment Receipt, of the Ministry of Economy and Finance.
DFDL contacts:
Vathana Sar
Senior Adviser
vathana.sar@dfdl.com
Im Udomvityea
Tax Manager
udomvityea.im@dfdl.com
* The information contained in this legal update is provided 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.
