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Additional Tax Relief in the Fourth Round of Stimulus Measures to Respond to the Ongoing COVID-19 Pandemic

Additional Tax Relief in the Fourth Round of Stimulus Measures to Respond to the Ongoing COVID-19 Pandemic

May 29, 2020

Due to the ongoing COVID-19 situation, on 26 May 2020, the Royal Government of Cambodia (“RGC”) issued a press release on the fourth round of stimulus measures in response to the COVID-19 pandemic, which are aimed at rebuilding and promoting economic growth after the COVID-19 crisis.

The newly announced package extends tax relief previously set out, and includes new tax relief for banks and financial institutions.

Extension of previous tax relief measures for another two months

The previous tax relief measures that covered the following sectors for the period March to May 2020 have been extended as follows:

Tourism sector

All companies in the tourism sector (i.e. hotels, guesthouses, restaurants, and travel agents) will continue to be exempt from the payment of all monthly taxes for another two months (i.e. for June and July 2020). This applies to businesses that are registered with the General Department of Taxation (“GDT”) and have business activities in Phnom Penh, Siem Reap, Preah Sihanouk, Kep, Kampot, Bavet, or Poi Pet.

Aviation sector

All airline companies established in Cambodia are granted exemption from Minimum Tax for another two months, i.e. for June and July 2020.

Reduced Withholding Tax rate on loans sourced from both local and overseas lenders

New loans

The Withholding Tax (“WHT”) rate on interest of loans borrowed by banks and microfinance institutions from either local or overseas lenders, is reduced from 15% (for local lenders) or 14% (for overseas lenders) to:

  • 5% for all countries, regardless of whether or not there is a Double Taxation Agreement with Cambodia, for the year 2020.
  • 10% for all countries, regardless of whether or not there is a Double Taxation Agreement with Cambodia, for the year 2021.

Existing loans

The WHT rate on interest of existing loans borrowed by banks and microfinance institutions from either local or overseas lenders, is reduced from 15% (for local lenders) or 14% (for overseas lenders) to 10% for the year 2020.

We understand that the RGC is closely observing the socio-economic impacts of the current global pandemic, and will set forth further measures to provide appropriate support to businesses as needed. We will keep you posted when we receive further updates from the RGC.

If you have any questions on this alert, please contact the undersigned or your usual VDB Loi adviser.

AUTHORS

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).


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With UK and Australian accounting qualifications, and a Master’s of Tax from the University of Melbourne, Bunhuy brings a wealth of international and local tax and accounting experience to his work at VDB Loi. His strong grounding in tax compliance, advisory, and internal audit, and his managerial role with Big 4 Firm Deloitte gives him a unique perspective that provides added value to VDB Loi’s clients. Bunhuy conducts tax reviews and due diligence, and advises on market entry, structuring, and transfer pricing for clients across a range of industry sectors, including financial services, consumer goods, real estate, and garment manufacturing. He speaks Khmer, English, and Mandarin.


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