Clint O’Connell

Before April 12 2013, a real regime taxpayer (a taxpayer registered with both the Ministry of Commerce and General Department of Taxation (GDT)), in Cambodia could simply undertake to meet their tax obligations themselves or alternatively use a representative to perform those obligations for them. In law, and in practice, the taxpayer representative merely required written confirmation of the transferred rights (in part or in whole), normally in the form of a power of attorney document, of the taxpayer to enable the representative to carry out such undertakings with the tax authorities as submitting tax declarations, making tax payments, lodging protest letters and appeals. The coming into force of Prakas 455 MOEF/PrK "Prakas on Tax Service Agents" (Prakas 455) in April this year has put an end to all that. The underlying purpose of Prakas 455 is to ensure that there is a bare level of quality and professionalism in the services that is being provided by tax agents in Cambodia.

What that means in practical terms is that those physical or legal entities that held themselves as providing tax services on behalf of real regime taxpayers in the past will now need to meet certain criteria, and in some cases sit an examination conducted by the GDT, to obtain and maintain a valid license from the GDT to operate as a tax service agent.

A real regime taxpayer may still complete their tax obligations themselves if they still wish – directors, managers, and accountants who do this will not be considered as tax service agents. It is important to note that a real regime taxpayer who receives tax-related services from a person who is not a tax service agent and who does not have a valid license shall be liable for a fine of KHR5 million ($1,200).

Annual examination

The first step in obtaining a license to operate as a tax service agent is to successfully pass the tax service agency examination as prescribed by the GDT. The GDT will arrange a tax service agency examination at least once a year and shall inform the public of the date, place and other conditions at least 60 days before the date of the examination.

To be eligible to sit the examination, prescribed and run by the GDT, to become a tax service agent, a physical person must be 18 years or older who is either a Khmer national or foreign resident who resides in Cambodia, have a relevant qualification or record of study and a clean criminal record.

A legal person who has an accounting and auditing services license from the Ministry of Economy and Finance, certified accountants and auditors who are members of the Kampuchea Institute of Certified Public Accountants and Auditors and former tax officials with 10 or more years' experience with the GDT who have not committed any prior unlawful act regarding tax, are exempted from having to sit the examination.

Persons who wish to run a business as a tax service agent must have a tax service agency license issued by the GDT. Prakas 455 sets out the documentation required for both physical and legal persons in respect to obtaining a license. Confirmation from the GDT that the tax service agency exam has passed the tax service exam, and have a good record with respect to compliance with the tax law are key aspects to successfully obtain a license.

The tax service agency licenses must be issued by the GDT and are valid for two years. With the license fee being KHR1 million for a physical person and KHR2 million for a legal person. The rights and obligations of tax service agents echo those already espoused in the Law of Taxation and can be summarised as follows:

• Communicate with the GDT, complete tax forms, lodge monthly/annual tax returns and pay all taxes;

• Sign on behalf of the taxpayer, show and provide documents of the taxpayer to the GDT;

• Protest and appeal as per the tax provisions;

• Fulfill all obligations that the taxpayer is responsible for under the tax regulations;

• Receive updates on current events or tax regulation updates; and

• Cooperate with the GDT with the purpose of improving tax compliance, preventing tax evasion and developing the tax regime in Cambodia.

• Perform tax agency services at a prescribed address permitted by the GDT, declare and pay taxes as per the tax law;

• Provide tax services with professionalism and integrity, assist taxpayers to fully comply with their tax obligations;

• Prevent the concealment of tax revenues by informing the GDT about tax evasion activities;

• Produce their clients written power of attorney and show their tax service agency identification card to tax officials;

• Communicate with the GDT with honesty, provide all necessary documents as requested by the GDT,

• Provide an annual list to the GDT a list of employees who are involved in the provision of tax services; and

• Continue to improve and update their knowledge and related professional skill.

Prakas 455 becomes effective from the date the GDT officially issues tax service agency licenses for the first time to successful exam candidates.

Clint O'Connell (clint.oconnell@vdb-loi.com)

VDB Loi

Tel: +855 23 964 430

Website: www.vdb-loi.com