Instruction No. 018 MEF.I.GDT on the Procedure for obtaining VAT credits and refunds dated 8 August 2023 re-states existing procedures on claiming VAT refunds along with some important updates.
Starting with the key updates first. Instruction 018 provides the following:
Medium or Large Taxpayers (Taxpayers) who request a VAT refund need to comply with the following procedures:
a) Taxpayers whose main activity relates to exports or that are registered as a qualified investment project (QIP) and other taxable persons who have VAT input credits for more than three (3) consecutive months can request for a VAT refund within three (3) or six (6) months or no more than one (1) year to avoid the accumulation of VAT credit for several years.
b) If taxpayers accumulate VAT input credits and fail to request a refund for more than one (1) year, the refund period (see our comments below) as stated in Prakas No. 576 MEF.P., dated June 19, 2018, on the Procedure for VAT Refunds shall not apply.
c) No VAT refunds shall be granted if taxpayers accumulate VAT input credits for more than three (3) years (N-3). However, taxpayers can request a VAT refund for input credits obtained pre-2020 provided that the request is submitted to the GDT before 31 December 2023.
d) Taxpayers have a responsibility to ensure that their bank account details, and enterprise information are up to date as per the Law on Taxation.
e) Provide required documents and VAT accounting records adequately and timely as per the requirement of GDT, otherwise, the request for VAT refund shall be suspended or refused until GDT has received those documents and records.
f) The GDT may suspend the VAT refund temporarily if the enterprise requesting a refund owes tax or is subject to tax reassessment until the tax arrears are settled or tax assessment completed.
Instruction 018 also provides the following points with respect to being able to record a VAT input credit which will form the basis of a VAT refund:
a) VAT input credits are recorded by taxpayers via the monthly E-Filing system of the GDT.
b) A VAT input credit can only be recorded for the month in which the taxable supply occurred (including VAT on imported goods).
c) A VAT input credit can only be claimed on VAT taxable supplies by a taxpayer that carries out taxable supplies. A taxpayer that carries out non-taxable supplies cannot claim a VAT input credit.
d) The documentary evidence required to support a VAT input credit includes but is not limited to the following:
- For the purchase of domestic goods or services, taxpayers shall have the tax invoice (original) which follows the criteria stated in Prakas No. 723 MEF.P., dated August 4, 2019. VAT input credit shall not be permitted for commercial invoices.
- For imports, taxpayers Re required to have customs declaration and payment receipts (original) with the valid name and information of the requesting enterprise.
As noted in our earlier update this year – 5 Tips to Successfully Obtain a VAT Refund – the key to ensuring that you successfully obtain a VAT refund include ensure you are eligible to apply, apply early and frequently, maintain proper supporting documentation, become a gold taxpayer if you can, and ensure that your tax arrears and audits are in check. Notification 018 effectively repeats these key points in addition to providing the important deadline for those taxpayers that still have pre-2020 VAT input credits to put in your VAT refund request before the end of 2023!
As per Instruction 018 you can still apply for a VAT refund even if the VAT inputs credits that make up some or all the refund requests are more than one (1) year old. However, the GDT is not bound in that scenario to follow the VAT timelines as outlined in Prakas 576.
To recap the key takeaway from Prakas 576 is that for most taxpayers who follow the VAT refund process correctly the timeframe to receive a VAT refund should be approximately forty (40) working days (this timeframe may be shortened for taxpayers who have a Gold Taxpayer Compliance Certificate). The VAT refund timeframe for Diplomatic Missions/Foreign Councils/INGO’s and Technical Co-operation Agencies of other Governments is approximately 15 working days.
Restating our earlier DFDL update for those embarking on the process of obtaining a VAT refund in Cambodia – it may feel at times like a perilous journey. It is not unusual for a VAT refund process to be fraught with unexpected twists and turns, testing both your character and your patience. In our experience, however, if you prepare well and travel with the right companions, the VAT refund process can be successfully navigated. We have successfully obtained VAT refunds for our clients and understand the VAT process well.
The DFDL tax team is always ready to answer any questions you may have on this and other tax issues. please contact us at: firstname.lastname@example.org.
Tax services required to be undertaken by a licensed tax agent in Cambodia are provided by Mekong Tax Services Co., Ltd, a member of DFDL and licensed as a Cambodian tax agent under license number – TA201701018.