2021 has continued to see steady activity with respect to acquisitions and re-structuring of businesses in the Cambodian market. There are a number of factors at the forefront of this activity, not least the pending capital gains tax implementation date of 1 January 2022, bargain hunting of distressed assets, and internal re-structuring of multi-national organizations, to name a few.
Only a few years ago the transfer of shares in a Cambodian entity was a fairly tax benign process with the primary emphasis of the purchaser being to inherit a Cambodian entity with few historical tax skeletons in the closet whilst for the selling shareholder the tax implications of a share transfer were typically limited to the tax jurisdiction in which they were domiciled.
How things have changed! In the space of a few years, the regulatory tax environment and the practice of the tax authorities in Cambodia has transformed dramatically, and those parties, buyers and sellers of shares, that fail to take the necessary precautions before embarking on a share transfer in a Cambodian entity do so at their peril.
Based on our experience with recent share transfer transactions, we have summarized the top five tax issues that buyers and sellers of shares in Cambodian entities should be aware of.
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