T he Law on Taxation of 1997 was passed by the National Assembly in January 1997,
and enacted by Royal Decree on 20 February 1997. Since then, the Ministry of Economy
and Finance has issued a number of regulations (called "Prakas") which
provide detailed implementing rules and procedures for various aspects of the 1997
One such regulation is the "Prakas on the Specific Tax on Certain Merchandise
and Services," which came into effect on 30 May 1997.
The Tax on Certain Merchandise and Services has been around since 1985, when it was
called the "Special Tax on Certain Locally Produced Goods". At that time,
this tax was levied on locally produced cigarettes, liquor, soft drinks, ice cream
and lotus seeds at rates between 20% and 50% of the price of the goods. In 1995,
the 1985 law was amended to apply to imported and locally produced goods. Rates were
lowered to the 10 and 20% range and the tax was renamed the "Special Tax on
Certain Merchandise." Petroleum products were added the list of goods subject
to the tax, and ice cream, lotus seeds and unprocessed tobacco were removed from
The scope of the tax was again expanded in the 1997 Tax Law to include automobiles
and certain services. The tax was again renamed, this time as the "Special Tax
on Certain Goods and Services" or "TSMS" (its French language acronym).
Under the 1997 Tax Law and subsequent regulations, the TSMS was extended to the services
listed in the accompanying chart.
The TSMS applies equally to imported goods and locally produced goods. For imported
goods, the TSMS is paid at the time of importation, before the goods are released
from customs. The basis for the tax is the "in customs value," inclusive
of all taxes except the TSMS and consumption tax.
For locally produced goods and services, the TSMS is paid to the Tax Department on
a monthly basis, based on the ex-factory price of the goods recorded in the invoice.
The TSMS on services is calculated on the invoiced price, with certain variations
depending on the type of service. For example, for air tickets the tax basis for
the TSMS is only 50% of the "fare basis" for round trip tickets and only
applies to tickets issued or sold in Cambodia.
All legal persons responsible for paying the TSMS must register with the Tax Department.
In general, registration must be done within 15 days after the company produces the
goods or supplies the services. For importers, registration most occur prior to import
of the goods.
The regulations also contain detailed bookkeeping requirements for each category
of company subject to the TSMS. The record books must be kept in a form approved
by the Tax Department and must be initialed and dated by the Director of the Tax
Department or his representative. Companies liable to pay the TSMS should ensure
that such records are currently being kept to avoid problems with the Tax Department.
Invoices for the sale of goods or services subject to the TSMS must now comply with
certain informational requirements set out in the regulation. For example, the invoices
issued by importers of goods for domestic sale must be serially numbered, and include
nine different items of information. Similar requirements are imposed on other items
and services subject to the TSMS. Again, it is important that companies selling services
or goods subject to the TSMS modify their invoices to comply with the new requirements.
Special documentation rules apply to the import of motor vehicles. The regulations
identify certain information that must appear in the bill of entry and require issuance
of an import tax receipt by the customs unit which clears the vehicle.
Anyone who purchases a vehicle imported into Cambodia after 20 March 1997 must be
very careful to obtain a certified import tax receipt. If the purchaser cannot produce
such a document for the Tax Department, the purchaser/owner will be liable to pay
the TSMS, according to the regulations.
- This column is provided solely for informational purposes by the Mekong Law Group,
and should not be relied on as legal advice. The Mekong Law Group is affiliated with
the law firm of Dirksen Flipse Doran & Le. This week's column was written by