Hot Tax Dispute Issues – And How to Solve Them
A tax official in the USA once said to the taxpayer he was auditing: “This will go a lot easier if you stop thinking about it as if it is your money”. No business enterprise enjoys tax audits, but they are a fact of life, also in Cambodia. Large tax disputes with the GDT that drag on for too long are a real threat to enterprise continuity and the morale of executives. All the more reason to minimize the grey area tax authorities can seize upon, and to prepare your business thoroughly to a challenge. We help you along the way with this highly practical webinar, listing and explaining the most common issues tax officials in Cambodia may look for during tax audits. With the expertise of VDB Loi’s renowned tax controversy team, an team of tax professionals exclusively dedicated to disputes with the GDT, we share which issues you can win, and how.
- Directors without salary: A common point of contention between taxpayers and the GDT. Can a director still be taxed even if has no salary? How can you counter such an assessment?
- Deemed profit margins: We have seen this in construction companies and services. The GDT may in some cases be reluctant to accept the declared profit and instead calculate its own taxable profit based on applying a “market rate profit margin” to the taxpayer’s costs or his turnover. If you do not accept this, can you win?
- Transfer pricing attacks: The GDT may seize upon group transactions such as service fees, agency fees, which keep the net profit of a Cambodian subsidiary low. Particularly, we see this in logistics, hospitality and various service industries. Our team has regularly won in these cases. How did we do it?
- Customs value vs. invoice values: Discrepancies between customs duty imposed values, often based on customs own minimum values, and commercial invoices leads to income tax or withholding tax assessments. How to defend yourself against this more recent issue?
- Loans: Borrowing from shareholders without interest, advancing money to group companies without interest, loans that are simply rejected by the GDT. All three are common issues in tax audits, and some are avoidable. Can you win this issue?
- Pass-through payments treated as revenue: Payments that are cost-reimbursements, payments made on behalf of someone else, disbursements made which are not an income. In some cases, the GDT may seek to impose VAT, Profit Tax or withholding taxes. How do you prepare your case when challenged?
- Taxes triggered by a transfer of shares: Even before the Capital gains Tax is formally implemented, the GDT has at times assessed share transfers with tax imposts. What happened in these cases? How can we best fight off such an attack?
- Fringe Benefits, Deposits, Discounts/free items
Edwin is the senior partner of VDB Loi and a leading foreign legal advisor living in Myanmar since 2012. A frequent advisor to the Government on transactions and privatizations in energy, transportation and telecom, he is widely recognized for his “vast knowledge” (Legal 500) and his ability “to get difficult things through the bureaucracy ” (Chambers, 2016). He advises international financial institutions on their largest Myanmar transactions, oil and gas supermajors, a greenfield multi- billion US$ telecom project and the Japanese Government on the Thilawa SEZ. He assisted two newly licensed foreign banks setup in Myanmar, acted for the sponsor of an 800MUS$ urban infrastructure PPP project and worked on 6 out of 7 power deals inked in 2016.
Laysym is an experienced tax advisor with a degree in management. He has over 11 years of work experience, including with KPMG and DFDL in Cambodia, where he was responsible for relations with the tax authorities. He has advised on tax planning for large property projects, on employee benefits, and has conducted tax due diligence on several major acquisitions in Cambodia. He has worked with a wide variety of clients, focusing particularly on the real estate and transportation industries.
Laysym heads VDB Loi’s Controversy Team, our successful group of senior tax advisors 100% dedicated to tax audits and disputes. He has a long and proven track record of successful defense of multinationals, banks and property developers.
An ACCA-qualified adviser, Sivila is an expert in Cambodian taxation with over 10 years of tax consulting experience, including several years with Big 4 firm KPMG.
At VDB Loi, he advises on tax structuring, disputes, and controversy, and conducts tax due diligence for clients across a range of industry sectors, including financial services, telecommunications, real estate, and garment manufacturing.
Sivila is also an associate member of the Kampuchea Institute of Certified Public Accountants and Auditors (KICPAA).
Sodeth is a tax director with more than 10 years of experience in tax consulting, tax audits, and corporate services, including with Big 4 firm KPMG. He manages VDB Loi’s tax disputes and controversy team, assisting clients to achieve successful outcomes to their tax audits and disputes. Sodeth has particular expertise in the manufacturing, telecom, financial services, and hospitality industries.