The General Department of Taxation (GDT) has issued a reminder for foreign companies supplying digital goods, services or any e-commerce activity in Cambodia to fulfil the obligation for Simplified VAT Registration before the April 1 deadline or stand to face fines.
The department issued a notification on March 28 stating that it has observed that fulfilment of the obligation for Simplified VAT Registration has been uneven, with a large number of foreign companies yet to complete the task.
The GDT has warned that, should foreign companies – also known as non-resident taxpayers – fail to register and file tax returns and pay the required amount of tax to the department on time, they will be subject to penalties as stipulated in the tax laws and regulations in force.
Mak Chamroeun, vice president and board of directors of Smile Shop e-commerce told The Post that he believed tax obligations are necessary to “ensure operators and entrepreneurs contribute to paying taxes to the state to boost the economy”.
He conceded that Cambodia has a small market for foreign companies supplying digital goods and e-commerce, but said that if those firms operate without the proper registrations or paying the necessary taxes then they are “not suitable” to be traders.
He urged the government to study “whether large foreign companies supplying digital goods or digital services in our country will be able to participate, and what the growth rate of this sector is”.
Chamroeun also recommended that authorities investigate how tax exemptions could be offered to more foreign companies to attract them to Cambodia, saying that their potential to collaborate with homegrown small businesses is promising but, as yet, untapped.
Hong Vanak, director of International Economics at the Royal Academy of Cambodia, said that the Simplified VAT Registration obligation for non-resident taxpayers supplying digital goods or e-commerce services is “mutually beneficial” to foreign companies and the government.
He said that registering for VAT, or value-added tax, per the notification of the GDT demonstrates that companies take responsibility for their tax obligations.
“Fulfilling the obligation for Simplified VAT Registration will show that the company has contributed to the socio-economic development of Cambodia in line with its responsibility,” Vanak said.
“This practice will develop and increase trust between private companies and the Cambodian government.”
