2016 18 April

Cambodia tax technical update – tax invoices

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“If you can’t explain it simply, you don’t understand it well enough.” – Albert Einstein

In an earlier tax alert we referred to the issuance by the General Department of Taxation (“GDT”) of Instruction No.1127 which provided important instructions on VAT invoices for taxpayers registered under the real regime of taxation in Cambodia. On the 24th of last month the Private Sector Tax Working Group (TWG) and Working Group D (WGD) met with senior officials of the GDT to discuss some of the concerns arising from Instruction No. 1127. This update summarizes the main points to come out of that meeting.

To recap the salient points to be taken from Instruction No. 1127 were:

  • All VAT registered taxpayers who operate under the real regime of taxation are required to issue an invoice for every sale/supply of goods/services in accordance with the four (4) invoice templates provided by the GDT.
  • An invoice which does not conform to the requirements of Instruction No.1127 shall not be permitted to be used to obtain a VAT input credit or to claim as an expense with respect to tax on profit.

As per Notification No. 1127, a VAT invoice is now required to include the following:

  1. Name, address, and value-added tax identification number (VATTIN) of the seller or supplier;
  2. Clear invoice number in a chronological order and date of issuance of the invoice;
  3. Name and address of the purchaser and value-added tax identification number in case the purchaser is a taxpayer under the self-assessed regime;
  4. Description, quantity, and selling price of the goods or services;
  5. Total prices excluding tax and separate tax amount;
  6. The ink quality printed in the invoice and the invoice paper shall be able to be kept for a long period of time; and
  7. All invoices shall be written or printed in Khmer, or both Khmer and English, and the English text shall be under the Khmer text.

Please refer to our earlier tax update here which explains Notification No. 1127 in detail and also provides a link to the four tax invoice templates that were issued by the GDT.

Following the meeting of 24 March the following points have been clarified:

  1. Invoicing Requirements
    With respect to the first six (6) requirements to constitute a valid VAT invoice as listed above – the invoice template used by a taxpayer can be modified from the templates that have been provided by the GDT provided that they still contain the first six criteria as listed above in some form. The GDT will not dictate where a taxpayer puts its logo on the invoice or how the invoices may be designed.
  2. Khmer Language Requirement
    The GDT has agreed to provide all taxpayers with a 6 month grace period (starting from 24 March 2016) to implement the Khmer language requirement into their invoices and to update their invoicing systems accordingly. In the event that taxpayers find it difficult to adjust their systems to meet the Khmer language requirement, particularly with respect to technical terms, the taxpayers can use English language for those terms.
  3. Customers Signature
    To be eligible to claim a VAT input credit the issuer of the VAT invoice must sign and stamp the invoice and the recipient must also sign and stamp all received VAT invoices. If the end customer is not VAT registered then they should receive a commercial invoice which they would not be required to sign as they would not be in a position to claim a VAT input credit.
  4. Invoice Serial Number
    The serial number sequencing for VAT invoices should be restarted at the beginning of each tax year. For businesses operating in multiple locations they can issue a separate serial number for each location or if the system is centralized they can issue the serial numbers from their head office.
  5. Implementation
    As noted above taxpayers have been given a six (6) month timeframe starting from 24 March 2016 to comply with the requirements of Instruction No.1127.

The DFDL tax team is always ready to answer any questions you may have on this and other tax issues.

DFDL Contact
Clint O’Connell
Cambodia Head of Tax
clint.oconnell@dfdl.com

*The information is provided 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