Rules for implementing VAT on foreign E-commerce activities in Cambodia

Prakas 542 also clarifies that the non-resident entity must register for VAT purposes in Cambodia and file for VAT returns if their turnover from the e-commerce activities reaches a certain threshold.

Notified in September 2021, Prakas 542 provides the rules for implementing value-added tax (VAT) on foreign e-commerce activities in Cambodia.

Prakas 542 is an implementing regulation of Sub-decree 65, which was issued in April 2021. It mandates that non-resident e-commerce entities register for VAT with the local tax authority – if they do not have a permanent establishment in Cambodia. (E-commerce entities here refer to entities engaged in the digital supply of goods and services.)

Sub-decree 65 was issued in response to the growth of Cambodia’s e-commerce sector, which bolstered by the pandemic, saw revenue reach over $900 million in 2021 and could reach $1.7 billion by 2025.

Cambodia’s national e-commerce strategy
Further, in November 2020, the government established a national e-commerce strategy aimed at developing the domestic industry and preparing for a robust digital economy that can integrate Cambodia’s small and medium-sized enterprises (SMEs) into global value chains.

Cambodia’s national e-commerce strategy comprises 10 chapters:

Legal and regulatory frameworks;

Institutional coordination and policy focus;

Information and communications technology infrastructure;

Payment systems;

SME regulations;

Cross-border trade;

Domestic e-commerce logistics;

Access to finance;

Market support; and

Digital knowledge/skills infrastructure.

What are the compliance obligations for a non-resident e-commerce provider in Cambodia?

A non-resident e-commerce supplier in Cambodia must register for VAT within 30 days. This is applicable for business-to-consumer (B2C) and business-to-business (B2B) transactions.

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Author: ASEAN Briefing.com

Source: Khmer Times