Dissecting the New Tax Law

By?Mao Sreypich?on?July 15, 2023

Phnom Penh’s business community gathered on Thursday for a forum hosted by EuroCham Cambodia on “Unpacking the Law on Taxation”, with the aim of breaking down the new regulations introduced in May.

The forum focused on the new Law on Taxation that went into effect on May 16, 2023, consolidating 15 types of taxes to provide consistency and close gaps in the current regulations.

The new provisions give the tax department broader powers, increase enforcement of penalties for non-compliance, and incorporate new definitions for permanent establishment (PE) and joint ventures.

Antoine Fontaine, Co-Chairman of the Tax Committee and Founding Partner at Bun & Associates, presented the General Anti-Avoidance Rule and Tax Evasion, which are new provisions adopted in Cambodia.

He said tax evasion refers to any intentional or premeditated act, leading to the loss of tax amount required by tax regulations. Besides that, the General Department of Taxation (GDT) has the power to reject or redefine the “real substance of the transactions” if it is found that the taxpayer has made a fictitious declaration of intention or with no substance.

“Without prejudice to other criminal offenses, the director, manager, owner of any enterprises or person responsible for any enterprise who has committed tax evasion as stated in article 226 of this law shall be punished with imprisonment from one to five years and a fine from 100 to 200 million riels,” he presented.

During the panel discussion, Tax Partner at Ernst & Young, Touch Darith Reangsey, said that even if authorities claim that the new provision is only a compilation of the old law, it remains a challenge when people look at the entire regulations.

She cautioned that individuals should read the regulations carefully and refer to any sub-degree or future regulations.

“You need to read it in detail and then refer to existing regulations because the law here becomes effective immediately. It also covers the current practice and the previous practice,” she said. “So, the risk of the consequences of time appliances is even more serious than before.”

She urged taxpayers, in particular investors in Cambodia, to be cautious and comply with the regulations.

“If you read the law and regulations and have any questions, you need to stop, check, and consider whether you need to consult with someone in the area of expertise or reach out to the GDT for clarification,” she said.

First published: Dissecting the New Tax Law

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