Letter No. 29613, issued by the General Department of Taxation (GDT) in August 2024, provides important clarifications regarding the application of the e-commerce reverse charge obligation for financial Institutions in Cambodia. This letter addresses a long-standing issue between the private sector and the tax authority by defining certain activities and transactions provided by non-resident e-commerce suppliers as non-taxable supplies for VAT purposes.
Key points from the letter include:
- Non-taxable supplies: Certain expenses, such as education and training materials, overseas lawyer fees, independent directors’ fees, and risk evaluation fees by recognized agencies, are considered non-taxable.
- Financial transactions: Monthly fees, bank charges, and expenses related to money transfers and obtaining credit from overseas are also classified as non-taxable.
- Specific exclusions: Annual fees for system usage, licenses, and royalties paid to companies like SWIFT and VISA are still subject to VAT.
Overseas VIP airport lounge expenses are not considered as a non-taxable supply for e-commerce purposes however as the service and/or good is consumed outside of Cambodia VAT should be zero-rated.
These clarifications took effect from August 22, 2024, and are not retroactive.