The Japanese Business Association of Cambodia (JBAC) has publicly raised to the General Department of Taxation (GDT) issues faced by Japanese investors concerning the calculation of income tax for foreign employees of their members’ representative offices and tax on additional benefits.
JBAC president Yogo Kanda said during a meeting with GDT director-general Kong Vibol on March 17 that the association noted there had been “gaps” in tax declaration, which they believe should have been audited to “determine the taxation of additional benefits on their payroll”.
The representative office of a Japanese company and member of the association requested clarification from the GDT regarding the procedure for adjusting the tax calculation of the salary of foreign employees.
Vibol clarified that there are two options for the Japanese representative office: the first option would be to adjust the salary tax base and tax return, and pay the tax on the additional salary, free from penalty. The second would be to pay tax on the additional benefits that have been recalculated by auditors, after which the GDT director-general will help facilitate a waiver from the Ministry of Economy and Finance.
In relation to the tax on additional benefits, GDT noted that JBAC “saw it as a double tax”. But Vibol said the GDT had, in fact, asked the association to prepare a letter of appeal adjusting the tax setting for the benefits and to “prepare additional guidelines regarding the determination of the tax base for the benefit” to prevent the issue from happening again.
Vibol subsequently sought to assuage investors on the issue, saying that concerns and problems of Japanese companies have “always been discussed and addressed through good cooperation between the GDT and JBAC”.
“Previously, Japanese investors have always tried to understand clearly the laws and regulations on taxation, and have had high compliance to the tax laws of Cambodia,” he said.
Kanda said that JBAC accepted the response of the GDT and promised to “better address” past deficiencies. He requested the “continued support” of the GDT in announcing and clarifying new regulations, especially with regards to provisions on the rules and procedures for applying value-added tax (VAT) to e-commerce transactions and how they relate to JBAC members in particular.
He added that the association “will seek to encourage Japanese investors to fulfil their tax obligations in accordance with the tax law in force”.
The GDT and JBAC have jointly said that they will continue to cooperate in “sharing information and providing better tax services” in a bid to minimise such issues in the future.
In response to JBAC’s request, the GDT said it will be holding a workshop with association members on the implementation of VAT on e-commerce transactions.