Prime Minister Lines Up Wide Range of Tax Incentives

Prime Minister Samdech Thipadei Hun Manet focused on tax issues quite a bit in his remarks during the 19^th Government-Private Sector Forum on 13 November 2023. Below are highlights of some of the most important tax incentives he is promoting.

1. Incentives for Qualified Investment Projects (“QIPs”):
   • Exemption from 1% Prepayment of Tax on Income (“PTOI”) for the first year of a QIP, even though it does not have an independent audit report (such report must be submitted to the General Department of Taxation (“GDT”) by June of the next year at the latest).
   • Suspension of having to make monthly PTOI payments until the end of 2025 for QIPs that produce:
     • Garment logos
     • Gloves
     • Socks
     • Towels
     • Pillow cases
     • Duvet covers
     • Bed sheets
     • Tablecloths
     To obtain the above PTOI incentives, QIPs must comply with Article 4 of Prakas No. 002 MEF.PRk.GDT on the Expansion of the Suspension of Income Tax Relief Payments for Garment Industry Enterprises dated 6 January 2023.
   • Extension of the benefits under Prakas No. 217 MEF.Prk on Incentives for the Voluntary Revision of Tax Returns dated 14 March 2022 by amending it be in effect until June 2024.
2. Delay in the implementation of Capital Gains Tax to the end of 2024 for gains on the following:
   • Immovable property
   • Financial leases
   • Investment assets
   • Goodwill
   • Intellectual property
   • Foreign currency
3. Tax exemptions for the tourism sector:
   • For hotels, guesthouses, tour agents, and restaurants that are registered with the GDT and operating in Siem Reap:
     • Exemption from all types of monthly taxes except value added tax (“VAT”) and Accommodation Tax for the period from October 2023 to 30 June 2024.
     • Exemption from 2023 Tax on Income (“TOI”). (PTOI paid in 2023 will be allowed as a credit to offset against the 2024 TOI.)
     • Waiver of all tax liabilities, such as the assessed tax, additional tax, 25% additional tax, and interest, that are from before 2023.
     • No audit program for the period 2020-2023.
   • In addition, no audit program for hotels, guesthouses, tour agents, and restaurants in Phnom Penh, Preah Sihanouk, Kep, and Kampot for the period 2020-2022.
4. Continuation of tax exemptions on:
   • Agricultural land and family land for farms
   • Import customs duty on agricultural equipment
   • Agricultural products
   • Immovable property worth less than KHR100 million
   • Stamp tax on the transfer of ownership rights of immovable property from parents to children, grandparents to grandchildren, and between spouses for the first time and inheritance
   • VAT on food items for people’s daily basic needs
   • Tax on minimum salaries of government officials and private sector employees
5. Continuation of the exemption from stamp tax (normally 4%) on the transfer of ownership rights of houses in Borey housing developments valued at less than US$70,000.
6. For purchase of houses from properly registered Borey housing developments that are more than US$70,000, buyers can deduct US$70,000 from the stamp tax base.
7. Exemption from additional tax and interest on property tax and/or unused land tax until June 2024. (This does not apply to any additional tax or interest that has is already been paid.)
8. Exemption from additional tax and interest on registered immovable property because of being previously declared incorrectly based on the land/building price, size, and age of the building.
9. Amnesty tallow taxpayers to register and pay tax for property that was not previously registered or tax paid on it.
10. Guidelines on unused land tax:
    • Unused land refers to land that is located outside the Immovable Property Tax area.
    • Five hectares per location can be deducted from the size of the land that is subject to the unused land tax.
    • To access this five-hectare exemption, must meet one of the following conditions:
      • It is agricultural land that is valued by the Unused Land Valuation Committee.
      • It is used for the business activity of a registered person.
      • It is under a lease agreement, regardless of whether or not it has a building on it.
      • It is state-owned land, regardless of whether or not it is leased ta registered person.
      • It is concession land leased from the government.
      • It is land that is located in a special economic zone that is used for agriculture, industry and services.
      • It is land that is registered under an educational entity.
    • These unused land guidelines will be effective from 2025.
11. Incentives for the agricultural sector:
    • Continuation for two more years of the tax incentives specified in Prakas No. 252 MEF.PRk on Tax Incentives for Sourcing and Production Enterprises in Rice, Corn, Soybean, Pepper, Cassava, Cashew Nuts, and Rubber dated 11 March 2019 (“Prakas 252”).
    • Treatment of the following five potential agricultural products—pailin longan, mango, aquaculture, animal husbandry, and domestic oil palm, which is the raw material for producing animal feed, in the same way as the products specified in Prakas 252 (i.e. rice, corn, soybean, pepper, cassava, cashew nuts, and rubber) (as long as entities provide their supplier list to the GDT as required under the Prakas).
    • Continuation of the exemption from PTOI for the period 2024-2025 for entities that the operate business activities as specified in Prakas 252 and the other five potential agricultural products specified above.
12. In the future, amendments of taxpayers’ information, such as their address, company director, etc. will be done fully online without the need for a physical visit the GDT.