RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/KHM/18
31 July 2002
(02-4235)
Working Party on the
Accession of CambodiaOriginal:  English
ACCESSION OF CAMBODIA
Descriptive Note on Implementation of VAT
The Government of the Kingdom of Cambodia has submitted the following Descriptive Note
on Implementation of VAT, with the request that it be circulated to members of the Working Party.
_______________WT/ACC/KHM/18
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Descriptive Note on Implementation of VAT
VAT was introduced in 1 January 1999 on 1,000 large and medium taxpayers (Real Regime).
The number of VAT taxpayers is increased rapidly to approximately 2,900 taxpayers in 2002. This
increase was the result of broadening the VAT base in other 5 provinces and surveys the newtaxpayers in Phnom Penh capital in 2001 as well as the increase of business activities (economic
growth). In year 2002, additional 5 provinces wi ll be extended because of annual turnover of
taxpayers over the threshold limitation.
For the small taxpayers (estimated taxpayers) or remaining provinces which are annual
turnover below the threshold are not required to pay VAT, but they have to pay turnover tax on the
rate of 2 percent. The rational behind the small taxpayers is that the VAT system requires the increaseof administration cost and compliance cost of taxpayers but revenue collection may be smaller than
the cost of small taxpayers.
VAT Rate:
10% single rate applies for domestic and importation (National treatment). There is no ever a
different VAT rate on imports depending on the country of origin of the imports (MFN).
Export of goods and services and international transports are 0% (Zero-rate).
Criteria for Real Regime System:
VAT apply only on taxpayer in the Real Regime. Criteria for Real Regime System:
- All types of corporation, investment enterprises, importers and exporters;
- Other enterprise that has, within 3 consecutive calendar months, taxable turnover
exceeds 125 million Riel for the supply of goods, 60 million Riel for the supply of
services, and 30 million Riel for the government contract value. (Or annual turnover:
500 million Riels for supply of goods, 250 million for supply of services, and 125
million Riels for government contract value.);
- Others may register voluntarily if it seen to be in their best interest.
Non-Taxable Supplies (exemption):
- Public postal services;
- Hospital, clinic, medical, and dental services and the sale of medical and dental goods
incidental to the performance of such services;
- The service of transport of passengers by wholly state owned public transportation
system;
- Insurance services;
- Primary financial services;
- The imports of articles for personal use those are exempt from customs duties;
- Non-profit activities in the public interest;
- The imports or the purchases of goods for use in the exercise of their official function
of foreign diplomatic and consular missions, international organizations and agencies
of technical cooperation of other governments;
- Exemptions of agricultural inputs (VAT is not imposed on produced raw agricultural
products of domestic and importation).  For details please see the attached Prakas No.
303 MEF/TD dated on 23 May 2001.  Detailed list of HS codes at 8-digit level are
referred to Custom Department.WT/ACC/KHM/18
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Taxable Value of VAT:
- Import = CIF + Customs duty + Excise tax if any;
- Supply of Goods or Services = the price of goods or services that the supplier charge
the customers;
- The making of a gift or sell at a lower price is the fair market value.
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