New Law on Taxation in Cambodia On May 16, 2023, the Royal Government of Cambodia promulgated the New Law on Taxation. This new law replaces the previous law on taxation, which was promulgated in 1997. The new law includes a number of changes, including a new tax rate for businesses with annual turnover of more than $2.5 million.
Key Changes in the New Law
The following are some of the key changes in the new law:
New tax rate for businesses with annual turnover of more than $2.5 million: Businesses with annual turnover of more than $2.5 million will be subject to a new tax rate of 15%. This is an increase from the previous tax rate of 10%.
Increased penalties for tax evasion: The penalties for tax evasion have been increased. Businesses that are found to be evading taxes could face fines of up to $100,000 or imprisonment of up to five years.
New rules for tax deductions: The rules for tax deductions have been changed. Businesses will now be able to deduct a wider range of expenses, such as training costs and research and development costs.
New rules for tax exemptions: The rules for tax exemptions have also been changed. Businesses that are involved in certain industries, such as agriculture and manufacturing, may be eligible for tax exemptions.
Impact of the New Law
The new law is expected to have a significant impact on businesses in Cambodia. The increase in the tax rate for businesses with annual turnover of more than $2.5 million is likely to lead to higher costs for these businesses. The increased penalties for tax evasion are also likely to deter businesses from engaging in this activity. The new rules for tax deductions and exemptions could provide some relief to businesses, but it is too early to say what the overall impact of these changes will be.
Businesses should take steps to comply with the new law
Businesses in Cambodia should take steps to comply with the new law. This includes understanding the new tax rates, penalties, and rules for deductions and exemptions. Businesses should also ensure that they are keeping accurate records to support their tax claims.
The new law is a significant change for businesses in Cambodia. Businesses should take steps to comply with the law to avoid penalties and ensure that they are paying the correct amount of tax.