The 31st of March is already an auspicious date in the Cambodian tax calendar: It is the deadline for most taxpayers in Cambodia to submit their annual Income Tax return. This year, however, the last day of March is also the deadline for non-resident e-commerce providers to register for value-added tax (“VAT”) in Cambodia.
Here are some important points that non-resident e-commerce providers should consider in determining whether the VAT registration deadline applies to them.
Who is required to register for VAT in Cambodia?
The obligation to register for VAT in Cambodia applies to non-resident providers who supply digital products, services or e-commerce exchanges from outside Cambodia to customers inside Cambodia, and who meet the following turnover threshold requirement:
Cambodian sales of approximately USD$62,500 or more in a 12 month period, or expected sales in any calendar year of approximately USD$15,000 or more for three consecutive months.
What are digital goods, services or e-commerce activities?
Cambodia defines “digital products” as intangible products ordered, supplied and delivered electronically. “Digital services” are defined as services that are performed electronically.
“Electronic commerce” is defined as:
“The activities of purchasing, selling, leasing, or exchanging products or services, including electronic commercial and civil commercial activities.”
Some examples of electronic commerce include:
“Electronic order of tangible products, Ordering/downloading digital products, Ordering/downloading digital products for commercial use of the copyright, Software updates and add-ons, Limited duration software and other digital information licenses, Single-use software or other digital products, Application hosting separate licenses, Application hosting-bundle contracts, Application service Provider (ASP), ASP License Fee, Website hosting, Software maintenance, Data warehousing, Computer support via a network, Data retrieval, Delivery of exclusive/high value data, Online Advertising , Electronic access to professional advice, Technical Information provided electronically, Information delivery, Access to an interactive website, Online shopping portals, Online auctions, Sales referral programs, Content acquisition transaction, Streamed (real time) web based broadcasting, Carriage fees, Subscription to a website allowing the downloading of digital products.”
What happens after I register?
A non-resident e-commerce provider who registers for VAT in Cambodia will be required to submit monthly VAT declarations to the General Department of Taxation (“GDT”). They must use these declarations to disclose and pay VAT on all business-to-consumer (“B2C“) sales to Cambodian consumers. Details of business-to-business (“B2B”) transcations must also be disclosed in the monthly VAT return. Business customers in Cambodia, however, will account for the VAT under a recently introduced reverse-charge mechanism.
What happens if I don’t register?
Non-resident e-commerce providers who fail to register with the GDT on time will potentially be subject to obstruction penalties under the Cambodian tax regulations. The GDT also has the ability to unilaterally register a non-resident e-commerce provider for VAT and to publish a list of non-compliant entities.
For assistance with the VAT registration process or for advice as to how these new regulations will apply to you in practice, please reach out to the author or your DFDL advisor.
To find out more about the VAT e-commerce regulations and their implementation, please refer to these earlier DFDL reports:
- VAT Registration Deadline Looms for Non-resident E-Commerce Providers (December 2021) https://www.dfdl.com/resources/legal-and-tax-updates/cambodia-vat-registration-deadline-looms-for-non-resident-e-commerce-providers/
- New Prakas on VAT for E-Commerce (September 2021) https://www.dfdl.com/resources/legal-and-tax-updates/cambodia-new-prakas-on-vat-for-e-commerce/
- VAT on Non-Resident E-Commerce Providers (April 2021) https://www.dfdl.com/resources/legal-and-tax-updates/cambodia-vat-on-non-resident-e-commerce-providers/
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 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.
Partner, Cambodia Deputy Managing Director & Head of Cambodia Tax Practice