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Prakas No. 496 dated 6 April 2016 on the Tax Registration
By Bretton G. Sciaroni
The Ministry of Economy and Finance issued Prakas No. 496, dated 6 April 2016 on the Tax Registration (“Prakas 496”). The purpose of Prakas 496 is to determine rules and procedures for tax registration pursuant to the Article 101 of the Law on Taxation in 2003 and to abrogate the Prakas No. 1139, dated on 9 October 2014 on the tax registration (“Prakas 1139”).
This dramatic move of cancelling one controversial regulation and issuing a new one followed many months of consultation between the General Department of Taxation (GDT) and private sector members of the Working Group on Law, Tax and Governance (part of the Prime Minister’s Government-Private Sector Forum) and the Tax Working Group (a related body comprised of tax specialists.) Representatives of the business community had long argued that the requirements of Prakas 1139 were onerous and misguided, and deterred new foreign direct investment and precluded expansion of existing business. The new replacement Prakas 496 positively addresses most of the issues of concern to the private sector. Thus, the issue of the new regulation is a most welcome development.
Prakas 496 provides the new updates on the requirements for tax registration and updating tax information of the enterprises. The significant updates include:
- Classify the required documents for the tax registration between Medium, Large and Small taxpayers. This is in keeping with the abolition of the Estimate Tax Regime.
- Add and classify political parties as Medium and Large taxpayers and imposes the requirement that they need to be registered at the GDT.
- The possibility that the chairman of board of directors or the owner of enterprise who is a foreigner and resides outside the Kingdom of Cambodia could issue a Power of Attorney to authorize any member of the board of directors recognized by relevant institutions or ministries (e.g., the Ministry of Commerce) be photographed and fingerprinted on his behalf in order to receive Patent Tax Certificate and/or VAT Registration Certificate and/or Tax Registration Card.
- Require the GDT to visit the enterprise’s location to take picture of the location and record data thereof into data management system of the General Department of Taxation.
- Require the enterprise to get prior approval from GDT for the enterprise’s registered address which has no building (i.e., vacant land) or is in the process of being constructed. (This requirement has been criticized by Private Sector that some enterprises do not need a physical office since their employees are able to work directly from their customer or supplier’s office or from home. Few business transactions are outsourced to local agent or enterprise to work for them. )
- Require the enterprises to update information of the enterprises in the event that any of the following information is changed:
a. Name of enterprise;
b. Address of principle office of enterprise, principle place of business or branch or warehouse of enterprise;
c. Address of enterprise’s owner, director or manager;
d. Legal form of enterprise;
e. Business objectives;
f. Transfer or close business operation;
g. Management Body;
h. Officer in charge of tax matters;
i. Enterprise’s account number;
j. Contact number (phone number and email).
Enterprises are required to submit application to Tax Administration within 15 days after making any change to any of the above information to update tax registration in compliance with all requirements and attach relevant original or copied last updated documents as required.
It appears that the requirement to update information as mentioned above put more burden on the enterprise as part of the tax registration updates. However, it is not as onerous as the previous regulation and is an improvement over Prakas 1139.
Sciaroni & Associates Taxation Practice Group offers a full range of tax compliance, advisory and dispute resolution services, from the filing of monthly and annual tax returns and patent tax filings, tax registrations and structuring advice to conducting due diligence in corporate transactions and assisting clients with disputes involving the tax authorities. We advise many of our clients on tax optimization strategies and assist them during tax audits. At every stage of a company’s life, our advisers ensure clients are fully compliant with the dynamic field of taxation in Cambodia. To our local clients we bring international standards of professional service and to our international clients we merge our understanding of local compliance and legislative practices with quality of service and financial information required for global business..
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