(Prakas No. 313 MEF.Prk.GDT, dated 10 May 2024)
Pursuant to Article 16 of Sub-Decree 139, dated 26 June 2023, implementing the 2021 Law on Investment (LoI), this Prakas is issued by the Ministry of Economy and Finance (MEF) to provide guidance on the ToI incentives provided to EQIPs, effective from 10 May 2024. Below are the key details highlighted under this Prakas:
Scope (Art. 2): This Prakas is applicable to a QIP that expands its investment activities in any form, including increasing existing production, diversifying product lines, adopting new technologies for better productivity or environmental protection, and other governmentapproved expansion projects.
Commencement of ToI exemption period (Art. 4): Prakas 313 clarifies that EQIP ToI incentives shall commence at the time when the EQIP generates its first EQIP income.
Coverage of ToI exemption period (Art. 4): The additional income tax holiday (ITH) period for the EQIP shall follow the ITH period granted to the original QIP (i.e., if the original QIP is granted a three-year ITH, the EQIP may also enjoy three years additional ITH). For reference, Sub-Decree 139 provides the following ITH period to QIPs based on specific criteriai :
• nine years for Group 1
• six years for Group 2
• three years for Group 3
EQIP Exemption Rate (Art. 5):
- EQIP exemption rate shall be the ratio of the EQIP Invested Capital divided by the Total Investment Capital (i.e., Original QIP Capital + the EQIP Capital). The EQIP exemption rate shall be the basis for calculating the income exempted from the ToI.
- The invested capital amounts to be used in the EQIP ratio shall be based on the actual capital that was invested for either the QIP or EQIP activities.
- Only the capital injected into the EQIP activities during the year shall be used as the basis for the EQIP exemption rate. In the subsequent periods, the EQIP shall re-calculate the EQIP ratio based on the year-to-date capital injected for the EQIP.
EQIP Refer to the examples provided under Art. 5 of Prakas 313 on how to calculate the EQIP exemption rate based on different scenarios.
Source: KPMG
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