In this issue we present Cambodian regulations and information touching on the following:
- Adjustment to rate of the specific tax and rate of export tax on certain merchandise
- Changes to formalities for Tax Registration
- VAT incentives for growing paddy rice, for collecting/purchasing paddy rice and for producing husked rice
- Determination of Customs processing fee on imported and exported goods
- Promulgation of the Law on Approval on Governmental Guarantee of Payments of the Kingdom of Cambodia to the Cambodia International Investment Development Group Co., Ltd
- Transfer of land area of 9,020 hectares located in Uddor Meanchey province to private company for investment and development on agro-industrial crop and rubber plantation
- TAXATION 2011
ADJUSTMENT TO RATE OF THE SPECIFIC TAX AND RATE OF EXPORT DUTY ON CERTAIN MERCHANDISE, Sub-Decree #269 (RGC), 30 November 2011
A new Sub-Decree № 269 Ankr. BK dated 30 November 2011 provides a number of changes to the existing export tax regime. The new rates go into force on 1 January 2012.
The existing export tax for wood of 10% has been raised to 15% for a number of items, including “wood sawn or chipped lengthwise with a thickness exceeding 6mm”, Mahogany, Virola, Balsa, Kempas, Balau, Mengkulang and two dozen other kinds of woods.
Wood that was previously subject to export tax at only 5% is now taxed at a 10% rate. That is for example the case for “wood (including strips and friezes for parquet flooring, not assembled) continuously shaped” and certain “unworked wood”.
There are over eight types of wood and many subcategories. Duty rate is levied by the wood type and the number of processing.
A number of wood products that previously escaped taxation are now brought within the scope of the export tax. “Particle board”, “oriented strand board”, “plywood”, “laminated board” and “fibre board” are now taxed at 5% in case of export. These items used to be free from export tax. “Densified wood” and “wooden frames for paintings, photographs and mirrors” are from 2012 onwards also taxed at 5% on export.
The Sub-Decree extends the list of types of stone that are liable to export tax. From 2012 onwards, marble, granite worked monumental stone and building stones are subject to a 10% export tax.
To avoid confusion, export of bricks such as cement bricks is not subject to an export tax at this time. Cement bricks are artificial stone that resort under tariff line 6810.11.00, and this tariff line is not affected by the Sub-Decree. It should be noted that marble and travertine, crude or roughly trimmed is subject to 20% export tax.
The export tax on petroleum is a special case with potentially high stakes once Cambodia’s wells go into production. A 10% export tax was already introduced on petroleum in 2010 by Sub-Decree № 11 on Amendment of the Specific Tax Rate and Export Tax Rate – dated 15 January 2010. Implemented from 1 Feb 2010, Sub-Decree № 11 introduced a 10% export tax on – (1) crude petroleum oil and (2) condensate.
In Sub-Decree № 269 of 2011, the same export tax is applied to other petroleum related products, notably petroleum oil other than crude, jelly, bitumen, residues and asphalt. These items were previously not subject to export tax. From 2012, an export tax of 10% will apply, as is the case for crude petroleum.
In sub-Decree № 172 dated 29 December 2010, natural rubber and synthetic rubber are subject to 10% export tax. Excise tax for these product is calculated based on the Specific Duty method and ranges from $50 to $300 per ton.
MODIFICATION RELATED TO ADDING DOCUMENTS INTO THE FORMALITIES FOR TAX REGISTRATION, Prakas # 1004 (MAFF), 30 November 2011
This Prakas aims to remind enterprises to comply with the Law on Taxation. Pursuant to the Article 101 of the Law on Taxation and Section 13.1 of Chapter 13 of the Prakas on Tax on Profit, stated that a person must register with the Tax Administration within 15 days after the person begins economic activity. A person shall inform the Tax Administration within 15 days of any change in the address, form, name, or business objectives, or composition of the leadership, or composition of the person in charge of tax matter or after the transfer or cessation of the business. Application Form for registration and notification letter shall be implemented in accordance with the form of approval letter and formalities determined by the General Department of Taxation. According to the Article 103 of the Law on Taxation, the Tax Administration has the right to register a person who is required by law to be registered and who has failed to register, and in this case, the Tax Administration can determine the effective date of registration.
INCENTIVES OF VALUE ADDED TAX FOR PLANTING PADDY RICE, FOR COLLECTING/PURCHASING RICE, AND FOR PRODUCING UNCOOKED RICE FOR EXPORT, Prakas #779 (MEF), 11 October 2011
This Prakas aims to specify the policy on the promotion of paddy rice production and export of husked rice of the Royal Government of Cambodia, the Ministry of Economy and Finance issues a mechanism on certain tax incentives for enterprise growing/planting paddy rice, collecting/purchasing rice and producing husked rice for export as follows: (1) domestic paddy rice supply shall be subject to VAT rate of 0%; (2) domestic husked rice supply shall be subject to normal VAT rate of 10%; (3) export of husked rice shall be subject to VAT rate of 0%; and (4) the input tax related to growing paddy rice, collecting/purchasing paddy rice and producing husked rice for export shall be allowed as a tax credit or a refund of tax. Tax on profit and minimum tax for such enterprise is detailed in this Prakas.
- IMPORT-EXPORT 2011
DETERMINATION OF CUSTOMS PROCESSING FEES ON IMPORTED AND EXPORTED GOODS, Prakas #989 (MEF), 24November2011
It is decided to determine Customs Processing Fees (CPF) on imported-exported goods as follows:
(a) 60,000 Riels for export or import of goods per container with a size of 20 feet and up with Full Container Load (FCL) and export or import of petroleum products per customs declaration (document of one administration);
(b) 40,000 Riels for export or import of goods which is unloaded in a container or loaded in a container with a size of 20 feet or otherwise from the abovementioned per a customs declaration;
The implementation and collection of such CPF in accordance with this Prakas will be started from 1 July 2012.
- FINANCE 2011
PROMULGATION OF THE LAW ON APPROVAL ON GUARANTEE OF PAYMENTS OF THE ROYAL GOVERNMENT OF THE KINGDOM OF CAMBODIA, Royal Kram№ NS/RKM/1111/018 (Royal Palace), 30 November2011
This Royal Kram promulgates the Law on Approval on Government Guarantee of Payments of the Kingdom of Cambodia for the Implementing Agreement, dated 26 April 2011, entered between the Royal Government of Cambodia, represented by the Minister of Ministry of Industry, Mines and Energy, and Cambodia International Investment Development Group Co., Ltd., and any of the permitted successors in title and assigns.
- PRIVATIZATION/STATE PROPERTY 2011
TRANSFER OF LAND AREA OF 9,020 HECTARES LOCATED IN UDDOR MEANCHEY PROVINCE, Sub-Decree #271(RGC), 1 December2011
It is decided to tr
ansfer a land area of 9,020 hectares in the Prumteb-Koulen wildlife sanctuary zone of Uddor Meanchey province to Nature Plantation (K.H.) Co., Ltd for investment and the development of agro-industrial crops (rubber plantation and other crops).