Cambodia: Implementation of VAT for certain industries

Cambodian Ministry of Economy and Finance (MoEF) has issued a Prakas no. 311, 312 and 313 on the implementation of VAT. The objective of Prakas 311, 312 and 313 above is to facilitate, encourage and promote export activities in both agriculture and the export industries by allowing the VAT input to be State-Charge and 0% VAT output in Cambodia. 

Implementation of VAT for Supporting Industries / Contractors that Supplies Goods or Services for Serving the Export 

Cambodian Ministry of Economy and Finance (MoEF) has issued a Prakas no. 311 on the implementation of VAT, is targeted to benefit VAT implementation exclusively for the supporting industries or the contractors supplying goods or services, for serving the exportation of the garment, textile, footwear, carry-bags & handbags and hat industries. 

The introduction of Prakas 311 provides enhanced guidance for those industries seeking to be recognized as support industries to the export sector and thus become entitled to charge output VAT at the rate of 0%. 

The goods and services that are supplied directly by the supporting industry or contractor as stated in the Prakas shall be limited to only: 

• Package 

• Yarn, fabric, button, zipper, hanger, garment clip and accessories for garment and footwear, bag and hat. 

• Service of washing, dyeing, printing fabric or garment, sewing, embroidering 

VAT tax benefits will be applied differently for the supporting industry and the contractors of supplies.

The VAT tax benefit for the supporting industry is implemented as follows: 

• VAT input on the importation of input products shall be treated as a state’s burden. Therefore, all local purchase of the supporting industry shall be subject to VAT at the rate of 10% 

• 0% VAT output will be applied if the supply of goods or services is made exclusively for serving exportations. However, if there is a local supply of goods or services, 10% VAT and other customs duty taxes will be applied as normal. 

In contrast, the VAT tax benefit for the contractors of supplies will be as follows: 

• 0% VAT output will be applied for exportations, while the 10% VAT output will be charged on local supplies. 

• 10% VAT input and other custom duty taxes will be imposed for importations and local purchases. 

In addition, to obtain the VAT tax benefit, the contractor shall apply in writing to the General Department of Tax, GDT for a benefit period not lasting over one year each time. 

The supporting industry and the contractor shall have the following obligations: 

1. To provide monthly report on the materials and goods processed in and out, following the pattern attached to this Prakas. 

2. To provide a copy of the supply agreement attached to the monthly tax returns within the following month after the execution. 

3. Issue the VAT invoice with 0% VAT to the garment, textile, footwear, bags and handbags and hat producing industries. 

For failure to comply with the conditions set forth in this Prakas, the VAT tax benefit will be confiscated. 

Implementation of VAT on the importation and supply of certain Goods 

In order to promote agricultural activity, Prakas No. 312 has been issued by providing a VAT tax benefit on the importation and supply of certain goods as below:

Implementation of VAT on contractors supplying rice for exportation 

Prakas no. 313 sets out VAT implementation and other obligations for contractors, who directly supply rice or rice production services for export purposes. 

This Prakas applies to persons who contract directly with exporters, to supply rice or services relevant to rice production for the purpose of exportation (‘’supplier’’). The VAT tax benefits are as follows: 

• VAT input. 

• VAT on imports is a charge set by the state, for the input production and for equipment to produce the rice for exportation. 

• VAT on supplies of local goods and services are taxed at 10%, except items stated in Prakas 779 SHV dated 11 October 2011. 

• VAT output. 

• The supplies of rice or any services relevant to rice production for the purpose of exportation are taxed at 0%. 

The supplies of rice in the Cambodian market are taxed at a rate of 10%.

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