The General Department of Taxation has been quite vociferous in recent years with respect to the tax registration obligations of both Associations and Non-Government Organizations (“NGO’s”) that operate in Cambodia. The introduction of Prakas 464 earlier this month reiterates the tax registration requirements of these bodies but also goes much further in clarifying the scope of the Tax on Income exemption provided in the Law on Taxation (LOT).
Prakas 464 makes it very clear that income derived by “social enterprises” fall outside of the scope of the Tax on Income exemption provided by the LOT. In practice Associations and NGO’s that operate in Cambodia may receive membership fees, donations and grants but may also run social enterprises which are often related to their underlying objectives i.e. running a restaurant which employs disadvantaged youth, selling products that are produced by victims of domestic violence or charging tuition fees for a training school. In addition the NGO or Association carrying out such activities are required to obtain a separate tax registration and maintain separate financials for these activities.
To obtain further information regarding the impact of Prakas 464 please click here for our detailed analysis.
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.
The information provided in this article 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.
The DFDL tax team has a vast and varied depth of experience concerning the tax obligations of Associations and NGOs, and the relevant TOI exemption process that applies to both. As always, we stand ready to answer any questions that you may have on this and other tax issues of concern.