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Notification No 3435 on Invitation to Enterprises to Settle the Tax Debts
By Simon Burlinson
On 2 June 2015, Cambodia’s General Department of Taxation (GDT) issued Notification No. 3435 (Notification 3435) inviting all taxpayers to settle their tax debts by 30 June 2015. Notification 3435 alerts all owners and directors of entities to pay their outstanding tax liabilities with the GDT. It also notes that the GDT has previously observed that while some entities have settled their tax debts with the GDT following issuance of a reminder notice to do so, others have not. Notification 3435 is arguably an attempt by the GDT to deal with those entities that have not paid their tax debts. It is yet another example of the tightening of the tax laws and regulations by the GDT who are actively clamping down on entities which have not fulfilled their tax obligations.
Notification No. 3435 states that in the event that owners and directors of entities with accrued and outstanding tax debts fail to settle these with the GDT by 30 June 2015, the GDT will name and shame the offenders in the press. Further, Notification 3435 states that the GDT will take strict recovery measures against tax debtors in accordance with the provisions of the applicable tax laws.
To that end, Article 109 of the Law on Taxation (LOT) grants rights to the GDT to take security over the property of a tax debtor in the form of a lien if outstanding tax debts are not settled after the GDT has issued a reminder letter to pay. While this method of enforcement is not specifically elucidated in Notification 3435, it is an important issue to consider if a company has outstanding tax liabilities with the GDT, particularly because the lien taken by the GDT as a result of non-payment of tax debts is stated in the LOT to take priority over all other liens that may exist over that property. However, this is only one enforcement measure available to the GDT for recovery of tax debts. Notification 3435 specifically mentions others: For instance, it states that bank accounts may be frozen (cf. Article 113 of the LOT), export-import operations may be stopped (cf. Article 114 of the LOT) and permits and licenses may be nullified (cf. Article 115 of the LOT) by issuance of a letter of notification to the bank, the customs office, and other competent authorities, respectively.
Sciaroni & Associates is a leading professional services and investment advisory firm doing business in Southeast Asia since 1993. Based in Cambodia with legal offices in Laos and Myanmar. Sciaroni & Associates assists clients in understanding the complex business conditions in those markets while efficiently identifying and resolving issues following strict international ethical standards. Our firm provides experienced advice and seasoned business insights to many of the world’s leading companies, financial institutions, governments, and international organizations to help maximize the value of our client’s investments.
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Sciaroni & Associates is a leading professional and investment advisory firm doing business in Southeast Asia since 1993. Based in Cambodia with legal offices in Laos and Myanmar, we provide experienced advice and business insights to many of the world’s leading companies, governments, economic think tanks, global development funds, international NGOs and the Royal Government of Cambodia in accordance with strict international standards.
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