Logo of Phnom Penh Post newspaper Phnom Penh Post - Double tax agreement signed amid Thai visit

Double tax agreement signed amid Thai visit

Traffic passes in front of the General Department of Taxation office in Phnom Penh.
Traffic passes in front of the General Department of Taxation office in Phnom Penh. Pha Lina

Double tax agreement signed amid Thai visit

Cambodia and Thailand have officially signed a double taxation agreement (DTA) that protects each country’s nationals from dual taxation and aims to encourage bilateral investment and strengthen economic ties.

Finance Minister Aun Porn Moniroth and Thai Foreign Minister Don Pramudwinai signed the agreement yesterday in the capital, in the presence of Prime Minister Hun Sen and Thai Prime Minister Prayut Chan-o-cha, who is conducting a state visit.

While full details of the DTA between the two countries have yet to be released, the agreement follows Cambodia’s aggressive push to shield investors from being onerously taxed twice on multinational operations, and to improve compliance with Asean standards.

In July, members of Cambodia’s General Department of Taxation (GDT) met in Bangkok to meet with their Thai counterparts to hammer out the draft during a two-day consultation workshop. According to Thai newspaper the Nation, a draft of the agreement was hastily ratified by Prayut’s cabinet before his arrival.

The Nation also reported that the agreement follows similar Thai DTAs, that once ratified allows income tax to be levied on where an individual or company counts the bulk of earnings based on a six-month residency period and will last 10 years. Excessive tax paid in a taxpayer’s home country will be deducted as exemptions or a tax credit.

Additionally, income tax levied on air transport will also be waived, while the taxing of dividends, interests, royalties and fees for technical services arising from capital assets will have to conform to agreed rates.

Clint O’Connell, head of tax practice for DFDL Cambodia, noted that while this is the fourth DTA that Cambodia has signed since May 2016, none have been ratified.

However, he said the Cambodian and Thai governments have been trying to push an agreement through for years and it has been seen as a priority issue given their geographic proximity and the volume of cross-border investment.

“We would expect a DTA to provide clarity to Thai investors in Cambodia on issues such as taxing rights, the elimination of double-taxation, and the reduction of withholding taxes on cross-border transactions which should help to encourage foreign direct investment,” he said.

Data from Thailand’s Ministry of Commerce show that over 200 Thai companies have invested in Cambodia’s agriculture, manufacturing, tourism, retail and digital finance sectors. Additionally, data from the Council for the Development of Cambodia shows nearly $122 million worth of Thai investment was approved last year.

MOST VIEWED

  • Investors’ $14.4M projects approved

    New investments from local and foreign sources continue to pour into Cambodia despite the Covid-19 pandemic remaining a lingering threat to regional and global economies. This comes as the Kingdom’s gross domestic product (GDP) is expected to contract between one and 2.9 per cent this

  • NagaWorld casinos set to reopen, schools to follow

    NAGACORP Ltd has requested that it be allowed to reopen its NagaWorld integrated resorts in Phnom Penh after the government recently approved casinos to operate again, provided they follow Covid-19 prevention measures set by the Ministry of Health. Mey Vann, the director-general of the Ministry

  • Rubber exports stretch 17%

    Cambodia exported 97,175 tonnes of natural rubber in the first five months of this year, surging 17 per cent compared to the same period last year as the Covid-19 pandemic stretches on, Ministry of Agriculture, Forestry and Fisheries official Khuong Phalla told The Post on Thursday. Phalla,

  • ASEM supports Kingdom’s proposal to postpone meeting amid Covid

    The 13th Asia-Europe Meeting (ASEM13) scheduled to be held in Cambodia in November has been postponed until mid-2021 due to the Covid-19 pandemic, a Ministry of Foreign Affairs and International Cooperation press statement released on Saturday said. The decision was made during a two-day meeting

  • Coffee maker roasted for producing fake product

    The Ministry of Interior’s Counter Counterfeit Committee will send a suspect to court on Monday after she allegedly roasted coffee mixed with soybeans and other ingredients, creating a product which could pose a high risk to consumers’ health. On the afternoon of July 2, the

  • Cash handout programme 80% complete

    Minister of Social Affairs, Veterans and Youth Rehabilitation Vong Soth confirmed on Thursday that the implementation of the Cash Transfer Programme For Poor and Vulnerable Households During Covid-19 had been implemented for more than 80% of the over 560,000 families. The programme was introduced one week ago.

  • Cambodia armed with money laundering laws

    Money laundering will now carry a penalty of up to five years in prison while those convicted of financing terrorists will be jailed for up to 20 years, according to new laws promulgated by King Norodom Sihamoni and seen by The Post on Thursday. Comprising nine

  • Where is Cambodia’s exit strategy that can save the economy?

    With the prospect of being slammed by a double whammy, the government is working on an economic recovery plan to deliver it from Covid-19 and the EU’s partial withdrawal of the Everything But Arms scheme in the next two to three years Cambodia is

  • Schools to be reopened in ‘three stages’

    With guidance from Prime Minister Hun Sen, the Ministry of Education, Youth and Sport, is in the process of reopening schools in three stages. But no timeline has been set, ministry spokesperson Ros Soveacha said on Thursday. Soveacha said the first stage will be to

  • Thai border crossings eased

    The Cambodian Embassy in Thailand said in an announcement on Wednesday that Thailand’s government has allowed certain passengers from several countries to enter its borders. The visitors must go back to their country immediately after their duties in Thailand are fulfilled, the embassy said.