• Locations
  • Desks
  • Awards
  • Careers
  • Solutions
  • Teams
  • Insights
  • Our Firm
  • Locations
  • Desks
  • Awards
  • Careers
© Copyright DFDL 2023. All Rights Reserved.
  • Privacy Policy
  • Solutions
  • Locations
  • Teams
  • Insights
  • Our Firm
  • Search
  • Contact Us
  • Back
Legal and Tax Updates
This page is more than 2 years old. Please visit the Legal and Tax Updates page for the latest from DFDL.

Cambodia Real Estate Update: Transfer Pricing Update – Impact on The Use of Loans To Acquire Land

Sep 4 2018
Written by Ramandeep Bhamra

Instruction 11946 issued by the General Department of Taxation (“GDT”) on the 21st of August 2018 (“Instruction 11946”) provides an important clarification regarding the determination of interest rates between related parties.

Since the introduction of Circular 151 in early 2014 Cambodian taxpayers were historically able to receive and extend interest free loans to domestic as well as overseas related parties. However since Prakas 986 brought in comprehensive transfer pricing guidelines in Cambodia in October last year there has been a large amount of speculation as to whether interest-free loans between related enterprises were still acceptable.

Instruction 11946 has now put the speculation to rest by clearly stating that when Cambodian taxpayers lend to, or borrow money from, related parties, the rate of interest to be applied to those loans must adhere to the “arm’s length principle” as set out in Prakas 986. In other words, the interest rate to be charged on related party loans should be determined based on the rate of interest that would have been charged between independent parties under similar circumstances.

In light of the above development, where loans between related parties have been used to acquire land in Cambodia these loans may be impacted by transfer pricing rules and may have to be updated.

Our recommendation is that a thorough analysis of existing related party loans be conducted during the ongoing fiscal year. Please do not hesitate to contact us should you need further advice in this regards.


DFDL Contacts

Guillaume Massin

Managing Director

Partner

DFDL Cambodia

guillaume.massin@dfdl.com 

Davy Kong

Consultant, Deputy Head of Cambodia Real Estate Practice Group

DFDL Cambodia

davy.kong@dfdl.com


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.


Read more Legal & Tax Updates

Read more about DFDL

Read more about DFDL Cambodia

Ramandeep Bhamra
View Profile

Related Articles

Legal and Tax Updates
Nov 16 2023
Raksa Chan

Cambodia: 2024 Foreign Employee Quota Application Deadline Approaching

Legal and Tax Updates
Nov 15 2023
Clint O'Connell

Cambodia Tax Alert: 2024 Annual Compliance

Legal and Tax Updates
Nov 14 2023
Clint O'Connell

Cambodia Tax Alert: Extends Capital Gain Tax Delay and Introduces New Tax Incentives at 19th G-PSF

Legal and Tax Updates
Oct 3 2023
Raksa Chan

Cambodia: Increase in Minimum Wage for 2024 for the Garments, Textiles, Footwear, Travel Products and Bags Sectors

We provide practical and creative legal solutions
and insights to complex business challenges.

Sign up for our Newsletter
  • Solutions
  • Teams
  • Insights
  • Locations
  • Desks
  • Networks
© Copyright DFDL 2023. All Rights Reserved.
  • Privacy Policy