2021 13 April

Cambodia: VAT on Non-Resident E-Commerce Providers


In an increasingly interconnected world facilitated by the rise of global digital commerce a number of gaps have been exposed in the tax systems of countries with perhaps one of the most significant issues being the difficulties in collecting tax from those providing digital goods and services without a physical presence in the jurisdiction where those goods and services are consumed. The issue of tax erosion, in particular regarding the collection of consumption taxes such as Value Added Tax (“VAT“), is being addressed by the Organization for Economic Co-operation and Development (“OECD“) and G20 countries have been working progressively to combat base erosion and profit shifting (“BEPS“).

Cambodia is not immune from the consequences of tax erosion created by the growth of e-commerce in recent times and with the introduction of Sub-decree No. 65 S.E on the Implementation of Valued Added Tax on E-Commerce (“Sub-decree 65”) on the 8th of April 2021 Cambodia has joined other countries in the region such as Thailand, Malaysia, Singapore, Indonesia, the Philippines and Vietnam in drafting and implementing new rules pertaing to e-commerce sales to Cambodian consumers by non-resident entities which are in accordance with OECD recommendations.

What is the purpose of Sub-decree 65?

As provided for in Article 75 of the Law on Taxation (“LOT”), Sub-decree 65 defines the conditions and outlines the mechanism for the collection of VAT on the provision of digital products and services electronically traded for consumption in Cambodia and all e-commerce activities which are supplied by non-resident entities that do not have a permanent establishment (“PE“) in Cambodia.

Article 75 of the LOT outlines the liability for the collection and payment of VAT in Cambodia. The fundamental principle enshrined in Article 75 is that a registered taxpayer or importer in Cambodia has the obligation to collect declare and pay VAT to the tax authority on each taxable supply that they make.

Article 75(2) of the LOT gave the ability to the Cambodian Government to issue a Sub-decree to impose special conditions concerning the liability to collect, declare and pay VAT where the supplier of the taxable supply that is consumed in Cambodia is not engaged in business in Cambodia or where there are other obstacles relating to the collection of VAT from the supplier.

VAT Registration

One of the key features of Sub-decree 65 is that it requires non-resident entities, not having a PE in Cambodia, who provide e-commerce goods or services to Cambodia consumers to register for VAT with the Cambodian tax authority if their actual or estimated revenue meets the threshold to register as a self-assessed taxpayer. The current revenue thresholds for tax registration are set out in Prakas 009 issued on 12 January 2021 and you can find more detail on those by clicking on this link.

It should be noted that the registration contemplated by Sub-decree 65 only relates to VAT and unlike standard corporate registrations in Cambodia would appear not to contemplate the establishment of a legal entity with the Ministry of Commerce. We also note that further guidance on the procedures to register for VAT for non-resident entities will be forthcoming in a Prakas to be issued by the Ministry of Economy and Finance.

Tax Obligations for Non-Resident E-commerce providers

The Cambodian tax obligations for non-resident e-commerce providers once registered for VAT and the obligations for taxpayers in Cambodia who receive services or goods from non-resident e-commerce providers are set out below:

  • B2C Transactions

A B2C (business to consumer) transaction contemplates the supply of digital products and/or services by a non-resident entity to an end-user consumer in Cambodia. The end-user consumer in Cambodia would typically be an individual that is not registered for tax. In that circumstance the non-resident entity that supplied the digital products or services to consumers in Cambodia, after registering for VAT will be obliged to file a monthly VAT return and pay 10% VAT on the value of the transaction to the Cambodian tax authority no later than the 20th day of the following month from the month in which the payment was made.

There would be no separate VAT invoice issued by the non-resident supplier to the Cambodian consumer. It would be the sole responsibility of the non-resident supplier to register for VAT and declare and pay the monthly VAT to the Cambodian tax authority.

So for example, if a non-resident e-commerce provider that does not have a PE in Cambodia provides streaming services to an individual consumer in Cambodia and meets the revenue threshold to register as a self-assessed taxpayer in Cambodia then non-resident e-commerce provider would need to register for VAT with the Cambodian tax authority and declare and pay 10% VAT on the value of the services it provides to its customers on a monthly basis.

  • B2B Transactions

The other scenario contemplated under Sub-decree 65 relates to B2B (business to business) transactions which would involve the supply of digital products and services by a non-resident entity to a registered taxpayer in Cambodia. Under the B2B scenario Sub-decree 65 implements a VAT reverse charge mechanism whereby the Cambodia registered taxpayer would have to account for the VAT output of the supply of products and services on behalf of the non-resident supplier but then conversely the registered Cambodian taxpayer receiving the digital product or service would be able to obtain a corresponding VAT input credit.

For example, if a non-resident entity provides a digital service to a Cambodian taxpayer that is valued at USD100 the Cambodian taxpayer would need to account for the 10% VAT output of that service on behalf of the non-resident provider i.e. VAT output of USD10. However, the Cambodian taxpayer would be entitled to receive a VAT input also of USD10 which would offset the VAT output payable to the tax authority in Cambodia.

At this stage, it would appear that as the Cambodian taxpayer accounts for the VAT output of the non-resident e-commerce provider that no separate VAT invoice is required to be issued by the non-resident e-commerce provider to the Cambodian taxpayer although the forthcoming Prakas will need to provide further clarification on this as under the current VAT regulations a valid VAT invoice is required to allow a Cambodia taxpayer to claim a VAT input on a service or good that they have purchased from a supplier.

What is E-Commerce?

Sub-decree 65 defines “electronic commerce” as the activities of purchasing, selling, leasing, or exchanging products or services, including electronic commercial and civil commercial activities. A non-exhaustive list of examples of electronic commerce are included in an annex to Sub-decree 65 and 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.


Those non-resident e-commerce providers and registered Cambodian taxpayers who fail to meet the obligations as set out above are subject to penalties in accordance with the LOT. Article 76(2) of the LOT provides that where an entity has failed to register with the tax authority at the time they were required to that entity will be liable for all the tax that is was due to pay from the date they should have been registered.

Obstruction of the tax law includes failure to register with the tax authority and an entity that obstructs the implementation of the tax law is liable to a fine from 5 million Khmer riel (approximately USD1,250) to 10 million Khmer riel (approximately USD2,500) and/or to imprisonment from 1 month to 1 year.


As noted at the beginning of this alert a number of countries are taking measures to address BEPS Action 1 that aims to identify and address the challenges that the digital economy poses for existing international tax rules. The OECD report on Action 1 generally re-emphasizes that VAT should be imposed in the jurisdiction of destination i.e., where final consumption occurs. For B2B transactions, the report reiterates the Guidelines’ principles that the business customer should self-assess VAT under a reverse charge mechanism. However, where the business recipient performs VAT-exempt activities (e.g. financial services), there may be BEPS concerns if the recipient country does not require VAT self-assessment and/or the services received are taxable in the seller’s country.

Additional BEPS concerns arise where a multi-location enterprise acquires a digital supply for use in multiple locations worldwide but VAT only applies in the country where the entity purchasing the supply is established. Because VAT generally does not apply to transactions between establishments of the same legal entity, the other establishments could purchase the services VAT-free.

The concerns regarding B2B transactions between a non-resident e-commerce supplier and a business entity in Cambodia carrying out non-taxable supplies such as a bank does raise issues as to the implementation of the VAT reverse charge mechanism as the bank in that example would not be able to claim a VAT input credit and may not be able to expense the VAT output cost for tax purposes – it remains to be seen if the Prakas will address this issue.

Overall we believe that Sub-decree 65 has been drafted in a pragmatic way and is aimed at broadening the base of Cambodia’s VAT system. We consider it is likely there is still some fine tuning required to make the provisions work in a coherent and coordinated manner with the current legislation and also with the new E-Commerce regulations recently introduced in Cambodia.

It will be interesting to see if the new implementing Prakas deals with issues experienced in other jurisdictions regarding the implementation of VAT on non-resident suppliers of digital goods and services such as overseas business operators providing e-Services through an e-Platform, if there will be a de minimis value (the threshold that the delivery must exceed in order for VAT to be charged), the issue of taxpayers providing non-taxable supplies as noted above, and the interplay between the registration for VAT by a non-resident e-commerce provider and the E-Commerce regulations in Cambodia (which requires an establishment of a legal presence in Cambodia) to name a few. In addition, with the new regulation on National Internet Gateway, it could be expected that the Cambodian tax authority may have access to a mechanism, through collaboration with the Ministry of Posts and Telecommunication, to take an enforcement action against non-compliant non-resident E-Commerce suppliers.  


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.



Clint O’Connell

Partner, Cambodia Deputy Managing Director & Head of Cambodia Tax Practice


Vansok Khem  

Country Partner & Deputy Head of Cambodia Corporate and Commercial Practice


Nearirath Sreng

Deputy Head of Cambodia Banking, Finance and Technology Practice



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