DFDL Cambodia Tax Update: Additional Tax Relief Provided for Businesses Affected by COVID-19

On 31 March, the Royal Government of Cambodia issued a press release outlining their additional measures to support the private sector and employees who are impacted by the COVID-19 epidemic. These measures are in addition to those issued in recent weeks by the Government to provide tax relief to affected sectors. We outline the additional measures taken below and the sectors that will be eligible for tax relief:

Airline Sector

A Minimum Tax exemption is provided to all airline entities operating in Cambodia for a period of three (3) months from March to May 2020; and
There will be a delayed due date with respect to the payment of aviation fees by airline entities operating in Cambodia for a period of six (6) months to the Secretary of State of Civil Aviation.

DFDL – We are seeking clarification of the Minimum Tax exemption outlined above to ascertain if it indeed refers to the annual Minimum tax payment due to be paid on the 31st of March 2020 or if it refers to the ongoing monthly pre-payment of Tax on Income payable by airline entities.

The update outlines that relevant government ministries will implement these measures so we expect to see soon clarification of the above from the Ministry of Economy and Finance and the General Department of Taxation.

Tourism Sector

Tax relief has already been provided to registered taxpayers in the Siem Reap province who carry out business activities relating to Hotels and Guesthouses. Under Notification no. 002 MEF dated 25 February 2020 these taxpayers will be exempted from the payment of all monthly taxes for the period of four (4) months from February 2020 to May 2020 – please click here for further details.

The update yesterday from the Royal Government extends this tax relief to include hotels, guesthouses, restaurants and travel agents that are registered with the GDT and have their business activities in Phnom Penh, Siem Reap, Preah Sihanouk, Kep, Kampot, Bavet and Poi Pet. The monthly tax exemption is provided for three (3) months from March to May 2020. The taxpayers are still required to submit the monthly tax returns and use the E-VAT filing for the monthly filing.

Please refer to the link above for further detail on how the tax exemption will work in practice.

Taxpayers in the tourism sector must submit their Annual Tax on Income return for the 2019 tax year by March 2020 but are allowed to pay their annual tax liability to the GDT on a installment basis up to November 2020.
The Royal Government will expand the scope of the contribution from the government to the minimum wage (20% of US$190) of worker-employees who are impacted from the suspension of business of hotels, guesthouses, restaurants and travel agent companies. To receive the 20% subsidy of the minimum wage, employees are required to attend a short training course (one to two weeks) organized by the Ministry of Tourism. Tourism business owners from hotels, guesthouses, restaurants and travel agents are required to verify and select trainees to receive this subsidy by providing the name list of employees, N.S.S.F card numbers or certificates.
Contributions to insurance for occupational risk and health care scheme (N.S.S.F) are not required during this period of employment suspension or the suspension of business operations.

Rental Payments

As many in the private sector have concerns regarding commercial properties and factory rental during the current difficult period, the Royal Government urges Ministries – State institutions and private owners of commercial buildings and factories to facilitate with their lessee/tenants to avoid contract termination or evictions if tenants cannot afford their rental fee after the payment due date. The Royal Government encourages owners of commercial properties and factories to negotiate with their tenants on delaying payment due dates and reducing fees for rental services.

Relevant ministries will effectively implement this instruction based on their own capacity.

The DFDL tax team as always stand ready to answer any questions that you may have on this and other tax issues of concern.

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.

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