The value added tax declaration for any month shall be submitted to the tax administration on or before the 20th day of the following month and the tax shall be paid according to the amount declared at the time the declaration is filed.

Article 71: Treatment of Excess Credits

If the input tax paid by the taxable person under article 64 of this law exceeds the output tax collected by that person for any month:

a. the excess shall be used as a tax credit against any outstanding liability of such person for the tax on value added for prior months,

b. the remainder of the excess shall be treated as an input tax credit under article 65 of this law for the succeeding month.

Article 72: Refunds for Exporters

The tax administration may refund the monthly excess input tax credits according to the request of the taxable person who has as a primary activity export if that person has shown proper certification of exports and has complied correctly with his obligations in book and other record keeping.

Article 73: Refunds Where Excess Credits Continue for Three Months or More

If the taxable person has excess input tax credits for three months or more that person may apply for a refund of the tax at the end of the third month or in any month thereafter. To be effective for any month, the request must be filed in a period of 20 days after the close of such month.

Article 74: Refunds to Diplomatic Missions and International Organizations

Foreign diplomatic and consular missions, international organizations and agencies of technical cooperation of other governments may apply for a refund of the tax on those goods purchased locally that are listed on an enumerated list which shall be determined by prakas of the Ministry of Economy and Finance. The refund shall be granted only on the certification by the chief of mission to the tax administration that the goods are being bought for use in the exercise of the official function of the relevant unit.

Article 75: Liability for the Collection and Payment of Tax

The liability for the collection and payment of tax is as follows:

1. A taxable person or importer has the obligation to pay the tax imposed by article 64 of this law with respect to every taxable supply in which the taxable person or importer engages.

2. Special conditions for the liability of the purchaser for the tax where the supplier is not engaged in business in the Kingdom of Cambodia or where there are other obstacles to the collection of the tax from the supplier shall be provided by sub-decree.

3. Any person making a supply of goods and services on behalf of the owner, other than as an employee, and having control of the supply shall be treated as a taxable person with respect to that supply.

Section 5: Administrative Provisions

Article 76: Registration

The principles of registration shall be as follows:

1. A taxable person as stated in article 59 of this law must complete registration for the tax on value added within a period of 30 days of the day on which the person becomes a taxable person. The rules and procedures for registration shall be determined by sub-decree.

2. Where a person required to register fails to register the tax administration may register that person from the time that the person should have been registered. The person so registered shall be liable for all tax in article 64 of this law from the date person should have been registered.

3. Where a taxable person registered under this article expects not to be classified as a taxable person for the current and succeeding year, such person may apply for de-registration.

4. For a group of two or more related persons where one or more of those persons is not a taxable person the tax administration may treat a taxable person as registered in respect to all or part of the related economic activities. Where none of the related persons is a taxable person the tax administration may register one or more of those persons of the group in respect to all or part of the related economic activities.

5. For registration purposes and with the approval of the tax administration, for a group of taxable persons who are related as defined in article 56 of this law, the activities of various members of the group may be treated as the activities of one designated member. In any such case, each member of the group must undertake to be jointly and severally liable for compliance with the provisions of this chapter.

Article 77: Value Added Tax Invoice

The principles for the value added tax invoice shall be as follows:

1. Any taxable person who makes a supply shall provide the purchaser a serially numbered Value Added Tax Invoice.

2. The invoice required by paragraph 1 of this article with respect to any supply shall have the title of âValue Added Tax Invoiceâ and shall contain the following:

a. the name and registration number of the seller,

b. the date of issue of the invoice,

c. the name of the purchaser or purchaser's employee or agent,

d. the quantity, description and selling price of the goods or services,

e. the total value excluding the specific tax on certain merchandise and services and the tax on value added,

f. the total taxable value if different from the amount in subparagraph e of this paragraph,

g. the amount of the tax payable,

h. the date of supply of the goods or services if different from the date of issue of the invoice.

3. A person cannot issue any invoice or other document indicating an amount which claims to be tax on the supply of any goods or services unless such person is a taxable person registered according to article 77 of this law, and the goods or services supplied are taxable goods or services.

4. Without prejudice to any other penalties, where any invoice falsely claims to be a Value Added Tax Invoice and shows that an amount of tax is payable, the person issuing such invoice shall pay to the tax administration within seven days of the date of issue of the invoice any amount shown on the invoice whether or not such tax amount would otherwise be properly payable.

5. In the case of sales at retail where most sales are not to a taxable person the invoice as required in paragraph 1 of this article shall be considered satisfied if the seller has provided a detailed cash register receipt or other documentation which shall be determined by sub-decree.

6. In the case of an import, the customs Bill of Entry properly filled and containing certification of the payment of the tax shall be used as the control document for establishing eligibility for a tax credit.

Article 78: Failure to Issue Value Added Tax Invoice

The failure to issue value added tax invoices shall be subject to penalties as follows:

1. Without prejudice to any other penalties, if the tax administration can find for a second time that an establishment of the a taxable person has failed to issue the required invoice, the tax administration may lock and seal the establishment for a specified period not to exceed 7 days.

2. If any establishment which has been closed under paragraph 1 of this article, has committed again such an offense, such establishment may again be closed for a specified period not to exceed 7 days.

Article 79: Books, Records, and Information

The principles for the books, records, and information for the tax on value added shall be as follows:

1. For the purposes of the provisions in this chapter the taxable person shall keep copies of all invoices issued and all invoices received.

2. The taxable person shall properly record and preserve books and records of every transaction made together with an account showing the amounts of tax collected on his sales and the amount of tax paid on his purchases and any adjustment to sales value or tax amount in a manner prescribed by the tax administration.

3. The works referred to in paragraph 2 of this article shall be maintained daily and totaled at the end of each month and a balance struck. The taxable person shall prepare monthly a Value Added Tax Statement in the manner prescribed by the tax administration.

4. The invoices, records and any other document relating to the tax shall be kept in chronological order in a manner and at the place prescribed by the tax administration for a period of at least 10 years after the completion of the last transaction to which they pertain.

5. All documents and records required to be kept under this article and any other documents and records pertaining to the business of the person shall be made available for inspection by tax administration on demand.

Article 80: Special Rules for Imports

The provisions of this chapter pertaining to imports shall be administered by the Customs Department in a manner as provided by sub-decree.

Article 81: Cessation of Business

The rules for the cessation of business shall be as follows:

1. Within 10 days upon ceasing to carry on the business for which the taxable person is registered that person shall submit to the tax administration a declaration on the prescribed form to which is attached detailed information on sales and purchases since the last tax declaration and provide details on all goods in stock on which tax has not been paid or on which a tax credit has been received and shall pay any tax due.

2. The rules and procedures for winding up the business, for de-registration, and the responsibilities of a legal representative shall be determined by sub-decree.

Article 82: Transfer of Business

The transfer of a business from one person to another person, in accordance with the conditions to be provided by sub-decree, shall not be subject to the tax on value added. The rule and procedures for the notification of transfer, the registration of the person acquiring the business, the responsibility of the person transferring the business, the responsibility of the person acquiring the business, and the preservation of records shall be determined by sub-decree.

Article 83: Contracts Entered Into Before the Effective Date of this Tax

The principles governing contracts entered into before the effective date of this tax shall be as follows:

1. The tax imposed by article 55 of this law shall apply to taxable supplies under contracts entered into before the effective date of this tax, if such supplies take place on or after such date.

2. In the case of any taxable supply described in paragraph 1 of this article, any value added tax recorded outside the contract shall be treated as additional consideration for the goods or services purchased and as a legal obligation of the purchaser to the seller.

Article 84: Tax Credit for Stocks of Goods

The tax credit for stocks of goods shall be determined as follows:

1. Where a person is newly registered and on the date of registration has stocks on which the tax on value added or the Tax on Turnover has previously been paid, that person may apply to be allowed, by the tax administration, a tax credit for the tax paid on that stock after the tax administration has verified that any invoices or the copies of the bills of entry for those goods are correct.

2. If satisfied to the correctness of such documents, the tax administration may authorize a tax credit for those supplies made within 60 days prior to the date of registration or the effective date of this law. Such a credit can be taken in one or more declarations for this tax subject to such conditions as the tax administration may impose.

Chapter 4: Amendments to the Finance Act of 1994 and to the Amendments to the Finance Act of 1995

Section 1: Provisions for the change of the Specific Tax on Certain Merchandise to the Specific Tax on Certain Merchandise and Services

Article 85:

From the date of the promulgation of this law the Specific Tax on Certain Merchandise of the amendment to the Finance Act of 1995 promulgated by the Royal Kram No CS/RKM/0995/01 dated 01 September 1995 shall be called the âSpecific Tax on Certain Merchandise and Servicesâ and a number of articles shall be amended as stated in this chapter.

Article 18 of the above mentioned law shall be changed as follows:

Â· 30 percent for automobiles classified under the harmonized tariff heading 8703 with an engine displacement of more that 2000 cc. and spare parts for those automobiles;

20 percent for petroleum products and automobiles classified under the harmonized tariff heading 8703 with an engine displacement of up to 2000 cc. and spare parts for those automobiles;

Â· 10 percent for all types of beverages and tobacco products, hotel and other entertainment services, and all types of motor vehicles and spare parts classified under the harmonized tariff headings 8702, 8704.21 through 8704.90, 8706, 8708, 8714, and 8711 with engine displacements from 125 cc. upwards.

2 percent for the domestic sale of tickets for the transport by air of passengers from inside of the Kingdom Cambodia to abroad, and telecommunication services from inside the Kingdom of Cambodia to abroad.

The phrase âthe sales price recorded on invoiceâ in paragraph 2 of article 21 of the above mentioned law shall be changed to âthe ex-factory sales price recorded on invoiceâ.

Add the paragraph as below to article 21 of the above mentioned law:

âfor services supplied in the Kingdom of Cambodia, the invoice price of the service supplied.â

The phrase âconcerning merchandise producedâ in paragraph 2 of article 22 of the above mentioned law shall be changed to âconcerning merchandise produced and services suppliedâ.

Add the paragraph as below to article 23 of the above mentioned law:

"the supplier for services supplied in the Kingdom of Cambodia.â

Add the paragraph as below to article 24 of the above mentioned law:

Â· âFor telecommunication and transport services in the Kingdom of Cambodia a separate register containing the date and value of services supplied from points inside of the Kingdom of Cambodia to points outside of the Kingdom of Cambodia.â

Section 2: Provisions for the Change of the Tax on Turnover

Article 86:

The Tax on Turnover as stated in the Finance Act of 1994 promulgated by the Royal Kram No 02NS dated 28 December 1993 shall be changed as follows.

1. Delete paragraph 2 of article 39 of the above mentioned law.

2. The phrase âvalue out of customs.â in article 46 of the above mentioned law shall be changed to âvalue inclusive of customs duty and the specific tax on certain merchandise and services.â

3. Add the paragraph as below to article 47 of the above mentioned law:

âThe Tax Department may collect consumption tax and apply penalties on any good being offered for sale within the territory of the Kingdom of Cambodia for which the seller cannot provide adequate documentation that the consumption tax was paid at the time of import.â

4. Add the paragraph e. as below to article 49 of the above mentioned law:

Â· âFrom 1 July 1997 all taxpayers shall:

Â· use the time of supply rule as stated in article 62 of this law which provides for the tax on value added to determine the date on which tax becomes a debt of the taxpayer towards the State.

Â· issue invoices in accordance with the rules and procedures as stated in articles 63 of this law which provides for the tax on value added;

Â· be considered as having obstructed the implementation of tax provisions and subject to penalties under article 133 of this law in the case of non-compliance with article 49 paragraph e.â

5. To the Amendments to the Finance Act of 1995, shall be added one paragraph to article 33:

âFrom 1 January 1998:

Â· taxpayers under the real regime system of taxation shall not be subject to the tax on turnover;

Â· taxpayers under the other regime systems of taxation shall be subject to the tax on turnover rate at the of 2 percent;

Â· articles 44, 45, 46, 47, and 48 of the Finance Act of 1994 and article 37 of the Finance Act of 1995 are repealed.â

Chapter 5: Provisions on Tax Rules and Procedures

Section 1: General Provisions

Article 87: Object

By the provisions of this chapter there shall be establish the rights and obligations of the taxpayer and the tax administration, procedures for the review of tax paid, procedures for resolving disputes, tax penalties.

The provisions of this chapter apply to all taxes unless a specific tax provides otherwise.

Article 88: Definitions

For the purpose of this chapter:

1. The term âtaxâ means any direct or indirect tax.

2. The term âpersonâ means a physical person or a legal person.

3. The term âtaxpayerâ means a person obligated to pay tax.

4. The term âtax administrationâ means the organization of the Tax Department.

5. The term âtax declarationâ means documents that tax provisions require a taxpayer or withholding agent to fill in under the conditions as stated in this law.

6. The term âwithholding agentâ means the person that tax provisions require to withhold and to pay taxes to the budget on behalf of the third person.

7. The term âeconomic activityâ means the regular or continuous or from time to time activity of a person whether or not for profit in the supply of or intent to supply goods or services to other persons for the purpose of obtaining a benefit.

Article 89: International Treaties

Provisions of international treaties related to taxation which have been ratified by the National Assembly shall take precedence over provisions of this law.

Article 90: Language Used in Tax Declarations and Tax Documents

All tax declarations as well as documents and correspondences necessary for tax assessment, tax collection and enforcement of tax law or involved in other procedures in the determination of tax shall be made in Khmer language.

Section 2: Rights and Obligations

Article 91: Rights and Obligations of the Taxpayer

The rights and obligations of the taxpayer shall be as follows:

1. The taxpayer has the rights as follows:

a. to be considered as confidential and used only for the purposes specified in tax provisions all information related to his activities which are provided to the tax administration as stated in article 94 of this law;

b. to regularly receive information concerning the process of tax system and procedure in tax assessment as stated in articles 96 and 118 of this law;

c. to receive information about oneâs own rights including the rights to appeal as stated in articles 118 and 122 of this law;

d. to appeal as stated in this law to every decision made by the tax administration as stated in articles 118 and 122 of this law;

e. to pay no more tax than what is required by tax provisions as stated in article 107 of this law.

2. The taxpayer has the obligations as follows:

a. to register with the tax administration as stated in article 101 of the law;

b. to submit the tax declaration and provide information as required by tax provisions as stated articles 98 and 104 of this law;

c. to pay taxes according to the schedule as stated in tax provisions;

d. to maintain books of account, supporting documents, and other documents and to show them to the tax administration as stated in tax provisions and article 98 of this law;

e. to present oneself to the tax administration according to the date as stated in the letter of notification of the tax administration as stated in article 99 of this law;

f. to pay various taxes, additional taxes, and interest as determined by the tax administration according to the date as stated in the tax provisions or as notified by the tax administration in writing as stated in tax provisions and articles 107, 130, 131, and 132 of this law.

Article 92: Powers and Obligations of the Tax Administration

The power of the tax administration includes the following :

1. to assess the tax base of the taxpayer or the withholding agent as stated in articles 116 and 117 of this law;

2. to request the presence of the taxpayer or the withholding agent as stated in article 99 of this law;

3. to determine the necessary books, documents, and supporting documents that the taxpayer or the withholding agent must maintain and provide to the tax administration as stated in articles 98 and 100 of this law;

4. to require the taxpayer or third person to provide information related to the taxpayer or withholding agent as stated in article 99 of this law;

5. to enter the residence or the business establishment of the taxpayer, the withholding agent, or a third person to obtain information related to the taxpayer or the withholding agent as stated in article 100 of this law;

6. to receive from state institutions information concerning or related to the taxpayer or the withholding agent as stated in article 116 of this law;

7. to apply recovery measures to the taxpayer or the withholding agent when the person fails to pay various taxes, additional taxes, and interest as required by this law as stated in articles 109 through 115 of this law;

8. to redetermine transactions between related taxpayers as stated in tax provisions.

The tax administration has the obligations as follows:

1. to collect taxes, additional taxes and interest as stated in article 93 of this law;

2. to maintain confidentiality of information that the taxpayer or a third person has provided and communicate this information only to the person as determined by tax provisions as stated in articles 94, 128 and 138 of this law;

3. to provide information to the taxpayer or to the withholding agent to ensure proper implementation of tax provisions as stated in article 96 of this law;

4. to refund or credit overpaid taxes as stated in tax provisions;

5. to provide a letter of notification for tax assessment to the taxpayer or to the withholding agent as stated in articles 116 through 118 of this law;

Section 3: Tax Administration

Article 93: Responsibility for Tax Administration

The institutions responsible for the administration of tax provisions are as below:

the Tax Department of the Ministry of Economy and Finance;

Â· other institutions of the Royal Government which tax provisions have empowered.

The tax administration has the obligation to collect taxes and apply penalties as determined by tax provisions and to appeal to the court in the case of violations of law.

Article 94: Confidentiality of Tax Information

The tax administration and every person who is or has been official and agent of the tax administration must keep confidential the information pertaining to the taxpayer that they have received during their official performance of their duty and can provide the information only to the person that this article allows.

The official and the agent of the tax administration can provide information related to the taxpayer only to:

1. an official and other agent of the tax administration at the time and for the purpose of carrying out the duties according to the tax provisions;

2. the criminal authority for the purpose of laying charges for tax violations;

3. the court in the stage of ruling in order to assess the tax of the taxpayer that must be paid or the responsibility for the violation of the tax provisions;

4. the tax authority of another country in accordance with the international agreement.

The person who receives information from another who is authorized to provide the information as stated in paragraph 2 of this article must keep the confidentiality of that information as determined in this article except for a minimum level for which it is necessary to provide the information.

The information related to the taxpayer can be provided to another person if there is written accord from the taxpayer.

Article 95: Delivery of Information to the Taxpayer

A letter or notification that the tax administration provides to the taxpayer shall impose an obligation on the taxpayer to the tax administration only when that letter or notification is made in written form and is delivered to the taxpayer.

When the tax provisions require the tax administration to notify a person in writing, that letter of notification shall be considered as correctly delivered only if that letter has been delivered directly to that person or sent by registered mail to the legal address of that person.

The date of a notification or other documents is the date of direct delivery to the person. In the case where the letter of notification is sent by registered mail the date of notification is the date of the stamp on the registered letter of bureau of post from which the registered letter is received by the taxpayer.

The letter of notification shall be considered correctly delivered and received if the conditions of paragraph 2 of this article are satisfied even if the person so notified refuses direct delivery or to accept registered mail.

Where the address of a person has changed and the person has failed to notify the tax administration of the change, the letter of notification sent to the last known address shall be considered correctly delivered and received.

Article 96: Publicity and Explanation of Tax Law

The Tax Administration must prepare short explanatory booklets about the important contents of each tax.

For a tax that the tax administration determines as advisable to explain and to guide, the local tax officials must arrange to educate those taxpayers so that they understand their obligations and rights.

Article 97: Incentives for the Efficient and Effective Collection of Tax

The Ministry of Economy and Finance shall establish an incentive system for officials and agents of the tax administration. The procedures for the operation of the incentive system shall be determined by prakas.

Article 98: The Keeping of Financial and other Supporting Documents

The taxpayer must keep books of account, supporting documents, and other financial documents as determined by the tax provisions and must submit these books and documents to the tax administration for inspection when requested.

As to the taxpayer who has no obligation to keep books of account according to the General Chart of Accounts of the Kingdom of Cambodia, he must keep a journal with chronological recording of all income and expenses pertaining to the business in line with a form prescribed by tax administration.

The person who must keep books of account, documents, or journals that are prescribed by the tax provisions or other provisions, must preserve these books or documents for a period of 10 years starting from the end of the tax year.

An invoice shall be issued for every transaction between the taxpayer and another person. The rules and the content of the invoice shall be determined by sub-decree.

The taxpayer shall correctly record the details of the invoice in the journals of account.

Article 99: Right to Receive Information

For the purpose of determining the tax that any person must pay or for the purpose of collecting taxes, the tax administration can issue a letter of notification to the taxpayer or a third person:

to provide information related to the taxpayer as stated in the letter of notification such as information on suppliers, clients, or bank accounts;

Â· to present oneself at the time and place designated in the letter of notification for the purpose of showing or providing information, documents, or data that are in the possession of the person and that are clearly stated in the letter of notification.

In addition to the information required as stated in paragraph 1 of this article, the letter of notification must contain the name and the identification number of the taxpayer (if available) and the signature of the tax administration issuing the letter of notification.

Article 100: Power of Investigation (without an advanced letter of notification)

For each inquiry for which a letter of mission is issued, the tax administration has the right to enter the business establishment, the place that is considered to be the business establishment, the place that is open to the public, or other places for the purpose of assessing the tax of any person that must be paid or for the purpose of collecting taxes:

during the business hours;

any time according to the condition and reasons stated in the warrant issued by a judge.

The tax administration that has entered legally the place as stated in paragraph 1 of this article can:

compile or copy documents that are in that place;

confiscate documents or other evidence that can become information for assessing the tax of a person that must be paid;

Â· install different control instruments or seal goods if they are related to any application of tax;

Â· inventory assets, raw materials, work in progress, finished products, and all other stock.

The tax administration can request a banking institution in the Kingdom of Cambodia to provide information about the taxpayerâs account in the bank.

When making its inquiry on entry the tax administration must demonstrate the proper behavior and avoid any possible damage to the honor or the business of the taxpayer. In any case, the on site inquiry shall not be more than what is necessary.

Article 101: Requirement to Register

A person must register with the tax administration within 15 days after the person begins economic activity.

A person shall inform the tax administration within 15 days of any change in the address, form, name, or object of the business, the transfer or cessation of the business, the leadership or the person in charge of tax matters of the enterprise.

Article 102: Certificate of Registration and Tax Identification Number

When the registration is complete the tax administration shall issue a certificate of registration which will include the tax identification number of the person. This identification number shall be used on all tax related documents.

All departments under the Ministry of Economy and Finance shall use the identification number of this article. All contracts with government institutions must bear the tax identification number to be considered valid.

Article 103: The Right of the Tax Administration to Register a Taxpayer

The tax administration has the right to register a person who is required by law to be registered and who has failed to register. In this case, the tax administration can determine the effective date of registration.

Section 4: Tax Declarations

Article 104: Preparation and Submission of the Tax Declaration

The taxpayer or withholding agent must submit a tax declaration to the tax administration according to the form, the time and the place determined by the tax administration.

The tax declaration must be signed by the taxpayer or his legal representative.

Article 105: Preparation and Submission of the Information Declaration and other Documents

Any person who makes payments to another person must submit to the tax administration an information declaration about that payment in a manner as prescribed by the tax administration.

Article 106: the Taxpayerâs Representative

The person who is the representative of the taxpayer, must have on behalf of the taxpayer, the right to:

Â· submit tax declarations;

Â· show reports and various correspondences;

Â· pay taxes as prescribed by the tax provisions;

Â· make protests and appeals;

Â· perform all obligations for which the taxpayer is held responsible under tax

provisions.

The taxpayer can transfer rights in written form to another person to carry out activity on his behalf in matters related to taxes with the rights and obligation as stated in paragraph 1 of this article. The taxpayer can set limits on this transfer of right.

The tax administration can require the person who acts on behalf of the taxpayer on the basis of the transfer of right to submit evidence in written form of this transfer of right.

The taxpayer shall be directly responsible for every activity of the person who is his legal representative or of the person who has received the right transferred from him until the time when the tax administration receives the confirmation in written form from the taxpayer about the cancellation of that transfer of right.

The person who is the representative of the taxpayer shall register this relationship with the tax administration within 15 days from the date that the relationship was established.

Section 5: Collection of Taxes

Article 107: Payment of taxes

The payment of taxes shall be as follows:

1. Tax is due and payable within the period of time that tax provisions require for the submission of a tax declaration.

2. A tax debt is due and payable within 30 days after a letter of notification for tax collection is delivered.

3. A tax debt is due and payable within 3 days after delivery of a letter of notification for tax collection as provided in paragraph 4 of article 116 of this law.

4. The Minister of Economy and Finance shall establish by prakas rules and procedures by which:

a. to schedule the collection of a tax debt to avoid the risk of a loss from non-collection;

b. to consider a tax debt as a non-collectable tax.

Article 108: Liability of Directors, Managers, or Owners

If the directors or managers or owners of an enterprise know or intentionally cause the enterprise not to declare or to under declare tax in violation of the tax provisions or not to pay withheld tax to the tax administration, those directors or managers or owners are personally liable for the taxes to be paid.

Section 6: Power of the Tax Administration in Tax Collection

Article 109: Rights on the Properties of Taxpayers

If any person who is obligated to pay tax as required by tax provisions, neglects or refuses to pay tax after a reminder letter of notification for tax collection is properly delivered the tax administration shall have a lien on that personâs properties in accordance with the tax debt.

The lien on the taxpayerâs properties is born on the date the reminder letter of notification for tax collection is delivered to the taxpayer as stated in article 95 of this law.

If various conditions of this article are correctly satisfied, the lien on the properties as stated in paragraph 1 will have validity and priority over all other liens existing before or after that lien on the taxpayerâs property.

Any person can make a protest to the tax administration requesting the removal of the lien on his own property as stated in paragraph 1 of this article by alleging an error in imposing that right.

If the tax administration has determined that the imposition of the lien on that property was in error, the tax administration must issue a certificate confirming the removal of the lien on the property within 10 days after the determination together with a statement in the certificate that the imposition of the lien was erroneous.

Article 110: Reminder Letter of Notification for Tax Collection

The tax administration must send a reminder letter of notification for tax collection to the taxpayer at least 15 days before proceeding with any recovery measure.

Article 111: Confiscation

The confiscation of the taxpayerâs properties shall be as follows:

1. If the taxpayer fails to pay the tax debt within 15 days after receiving the reminder letter of notification for tax collection, the tax administration can confiscate the taxpayer's properties to guarantee the payment of the tax debt as well as the expenses for the collection of the tax. For the purpose of this law the term âconfiscationâ means the confiscation by all means and the sale of the taxpayerâs properties by the tax administration but the confiscation of properties shall not exceed the tax debt and expenses for the collection of the tax debt.

2. The person holding or administering the taxpayerâs properties confiscated by the tax administration under paragraph 1 of this article can not return those properties to the taxpayer or use those properties to make various payments except for payments that tax administration has authorized.

3. The tax administration can implement the confiscation of the taxpayerâs properties which are held or administered by another person 15 days after notifying the person holding or administering the properties.

4. The person who is holding or administering such confiscated properties, must surrender those properties or pay taxes, additional taxes, interest, and expenses for the collection of taxes to the tax administration, except for such part of properties which are under the proceedings of liquidation of the business activity.

5. Any person who fails to surrender property, as stated in paragraph 4 of this article, is responsible in the amount of the value of those properties but not in excess of the amount which is the object of that confiscation.

6. Any person who has complied with the requirements in paragraph 2 and 4 of this article shall be released from any responsibility to the taxpayer or third persons on the property, tax amounts, or other obligations transferred to the tax administration.

7. If the tax administration has a sound basis to believe that the collection of taxes can suffer, the tax administration can require the taxpayer to pay tax immediately and if the taxpayer does not comply with this requirement can proceed with the immediate confiscation of the taxpayerâs properties.

8. Such personal property as determined by sub-decree is exempt from the confiscation.

9. The sale of the confiscated properties must be carried out by auction. Expenses incurred from this sale are the charge of the taxpayer.

Article 112: Protection of the Taxpayer

The properties to be confiscated by this law must be confiscated, held, and accounted for only by the tax administration. Other institutions of the government by themselves cannot use this law to confiscate or to hold those properties. If there is sale of properties confiscated by this law, any part of the proceeds, which are in excess of the tax liability of the taxpayer under this law, must be returned to the owner of those properties.

Article 113: the Freezing of Bank Accounts

The confiscation in article 111 of this law may include also the freezing of the taxpayer's account at the bank by the tax administration's letter of notification which goes into effect immediately upon delivery of that letter to the bank.

Under this notification for the freezing of bank accounts, the bank cannot open new accounts for this same taxpayer and cannot make payments from the accounts, except for the payments prescribed by the tax administration for settling the taxes to be paid, interest, and other additional taxes.

The frozen bank accounts can only be reopened with a letter of notification from tax administration.

The bank that does not comply with the letter of notification as described in paragraph 1 of this article, shall be responsible to the tax administration to the extent of the amounts in the taxpayerâs account at the time when the letter of notification is delivered.

Article 114: Stopping Export-Import Operations

The confiscation in article 111 of this law may include stopping export-import operations. Stopping export-import operations means the distraint by the customs administration of imported goods to be sent to the taxpayer and the goods to be exported by the taxpayer, under a letter of notification from the tax administration which takes immediate effect upon delivery of that letter to the customs administration.

The tax administration can confiscate and sell the taxpayerâs goods which are distrained by the customs administration according to the conditions as stated in article 111 of this law.

The release of export-import operation from the stopping shall be implemented under a letter of notification from the tax administration.

Goods distrained by the custom administration that do not belong to the taxpayer shall be released from this distraint with the approval from the tax administration.

Article 115: Order Nullifying Permit and License

The confiscation in article 111 of this law can include the issue of a letter of notification by the tax administration to the competent authorities requesting them to nullify various permits and licenses of the taxpayer to implement an activity.

Section 7: Tax Assessment

Article 116: Assessment of Tax

The tax amount shall be assessed as follows:

1. In the case where the taxpayerâs tax is paid through the withholding method and the taxpayer does not have the obligation to make the tax declaration, the taxpayerâs assessment of tax shall be the assessment of the tax amount withheld in the calendar year.

2. In the case where the taxpayer or withholding agent has the obligation to submit a tax declaration, the taxpayerâs or withholding agentâs assessment of tax shall be the assessment of tax that the taxpayer or withholding agent has calculated on the tax declaration submitted to the tax administration.

3. In the case where the taxpayer or withholding agent has the obligation to submit a tax declaration but does not do so, does not maintain proper records of account or other documents as required, or does not provide the necessary information to the tax administration to properly determine tax, the taxpayerâs or withholding agentâs assessment of tax shall be the unilateral tax assessment made by the tax administration and delivered to the person. The unilateral tax assessment shall be based on:

a. information mentioned in various tax declarations or in other documents submitted by the taxpayer to the tax administration;

b. information mentioned in an information declaration;

c. other information received by the tax administration.

4. When there is a basis indicating that the collection of tax can suffer, the tax administration may assess tax on the taxpayer at any time.

Article 117: Tax Re-Assessment and Period of Tax Re-Assessment

The tax re-assessment and period of tax re-assessment shall be as follows:

1. In the case of a tax assessment based on paragraph 1 of article 116 of this law, the tax administration can re-assess the tax within three years following the calendar year in which the withholding took place.

2. In the case of a tax assessment based on paragraph 2 and 3 of article 116 of this law, the tax administration can re-assess the tax in one of the periods of time as below:

a. within 3 years after the date the tax declaration was submitted;

b. within 10 years after the date the tax declaration was required to be submitted if there is evidence of the obstruction of the implementation of tax provisions;

c. at anytime with the written consent of the taxpayer.

3. The taxpayer or withholding agent may request to amend a tax declaration within three years of the filing date of the tax declaration in paragraph 2 of article 116 of this law, on the basis of an error or an oversight made by the taxpayer in the original tax declaration. If the amended tax declaration results in a refund or credit of tax, the tax administration has the right to do a verification under established tax verification procedures.

4. The taxpayer or withholding agent can request the tax administration to amend a tax re-assessment within 3 years of the date the tax administration made the tax re-assessment on the basis of additional information that was not available to the taxpayer or the tax administration at the time of the tax re-assessment.

5. Where a taxpayer or withholding agent amends his own tax declaration or requests the tax administration to amend a tax re-assessment, the time limitations for tax re-assessment under paragraphs 1 and 2 of this article will apply from the date the amended tax declaration was submitted or from the date the tax administration amends the tax re-assessment.

Article 118: Procedure for Tax Re-Assessment

The re-assessment shall proceed according to procedures as follows:

1. The tax administration shall provide a letter of notification for tax re-assessment to the taxpayer.

2. The taxpayer has 30 days to answer the tax re-assessment to the office of the Tax Department responsible for the tax re-assessment. Within that period, taxpayer can accept or dispute the tax re-assessment. The taxpayer shall be considered to have accepted the tax re-assessment if he fails to answer.

3. Where there is a dispute over the tax re-assessment, the taxpayer may file a protest with the Director of the Tax Department according to the procedures as stated article 120 of this law.

4. The office of the Tax Department responsible for the tax re-assessment shall forward the results of the tax re-assessment to the tax collection office within a period of 30 days after the issue of the letter of notification for tax re-assessment.

Article 119: Burden of proof

When the taxpayer fails to maintain sufficient documents or fails to provide sufficient information, the tax administration has the right to assess tax on the taxpayer on the basis of any precise information available to the tax administration. The burden of proof that the tax as determined by the tax administration is incorrect is on the taxpayer.

When there is clear difference between the taxable income or the income reported by the taxpayer and the purchase of assets or other things which make the taxpayerâs expenditure conspicuous, the tax administration has the right to assess tax on the basis of the estimated income appropriate for the amount of expenditures to buy the assets or other things that are conspicuous. The burden of proof that the tax as determined by the tax administration is incorrect is on the taxpayer.

Section 8: Settlement of the Taxpayerâs Protest

Article 120: Rules for Administrative Protests

The rules for the settlement of the taxpayerâs protest on tax issues shall be as follows:

1. A taxpayer who is not satisfied with the tax re-assessment or other decision made by the tax administration can file a protest with the Director of the Tax Department. The protest must be limited to facts or other information contained in the tax re-assessment or the decision or the procedures of the tax re-assessment.

2. The administrative protest must be made in writing according to the form as stated in the article 121 of this law, and must be submitted to the tax administration within 30 days after the day the taxpayer receives the letter of notification for tax collection from the tax administration.

3. The administrative protest does not relieve the taxpayer of any obligation to pay various taxes, additional taxes, and interest as specified in the letter of notification for tax collection.

Article 121: Contents of the Administrative Protest by the Taxpayer

An administrative protest can only be accepted if the letter of protest has the contents as below:

1. identification number of the taxpayer who makes the letter of protest, if available;

2. reference to the assessment, decision, or results which are the objects of the letter of protest;

3. facts or acts which are objects of the letter of protest;

4. reasons of the protest;

5. date and signature of the taxpayer and signature of the taxpayerâs authorized representative if necessary.

Article 122: Decision by the Tax Administration

The tax administration must issue a new decision within 60 days after the date the letter of protest is received to confirm the correctness or incorrectness, in whole or in part, of the tax assessment or other decision that the taxpayer disputes. The tax administration shall also state the basis of this decision.

If the taxpayer does not accept this new decision of the tax administration he can file a letter of protest to the Committee of Tax Arbitration within a period of 30 days.

Article 123: Committee of Tax Arbitration

The organization and functioning of the Committee of Tax Arbitration shall be determined by sub-decree upon proposition of the Minister of Economy and Finance.

Article 124: Appeal to the Court

The taxpayer has the right to appeal to the competent court against the decision of the Committee of Tax Arbitration within a period of 30 days after receiving notification of that decision.

The taxpayer must deposit in the national treasury an amount of money equal to the taxes, additional taxes, and interest under dispute and as assessed by the tax administration before filing the appeal to the court.

Section 9: Violations of Tax Provisions

Article 125: Negligence

The taxpayer or withholding agent is considered negligent if the amount of tax paid is less than the amount of tax as determined by tax provisions by no more than 10 percent.

The taxpayer or withholding agent is considered negligent if they fail to file a tax declaration or to pay tax at the date required by law.

Article 126: Serious negligence

The taxpayer or withholding agent is considered seriously negligent if the amount of tax paid is less than the amount of tax as determined by tax provisions by more than 10 percent.

Article 127: Tax Evasion

Tax evasion is the willful, knowing, or systematic and repeated violation of tax provisions with the intention of reducing or eliminating the tax amount required by tax provisions to be paid.

Shall be considered also as tax evasion any serious negligence as stated in article 126 of this law which is committed on:

1. two separate occasions within a period of three calendar years;

2. three or more separate occasions in any period of time.

Article 128: Obstructing the Implementation of Tax Law

Obstructing the implementation of tax provisions includes:

1. In the case where the person:

a. fails to maintain proper records of account and other documentation or fails to issue invoices on transactions;

b. fails to allow the tax administration access to records of account and other documents;

c. fails to register with the tax administration;

d. fails to notify the tax administration of any change in the registration as stated in this law;

e. makes or furnishes fraudulent records, documents, reports, or other information;

f. conceals or deliberately destroys accounting papers, records, documents, reports or other information;

g. attempts to obstruct the assessment or the collection of taxes;

h. fails to submit a nil tax declaration within 30 days of the date required by law;

i. willfully supports any of the above acts.

2. In the case where an official of the government:

a. discloses confidential information without authorization;

b. attempts to obstruct the assessment and the collection of taxes;

c. willfully supports any of the above acts.

Article 129: Criminal violation of Tax Law

Without prejudice to other administrative penalties a person who has engaged in tax evasion activities as provided in article 127 of this law, or obstructed the administration of the tax system as provided in article 128 of this law shall have committed a criminal violation of tax provisions.

Section 10: Additional Tax

Article 130: Additional tax

Additional tax must be applied to violations of tax provisions.

The additional tax for the underpayment of tax or the late payment must be calculated separately from the additional tax for the obstruction of the implementation of tax provisions.

In the case of the underpayment of tax the additional tax and interest shall be due and payable in the same manner as the underpaid tax amount.

In any case, the implementation of additional tax shall not affect the implementation of penalties for criminal violation of tax provisions.

Article 131: Additional Tax for Underpayment of Tax

To a person who is negligent, additional tax shall be 10 percent of the amount of the underpaid tax plus 2 percent interest on the amount of the underpaid tax for each month or part of a month that the amount of the underpaid tax is not paid.

To a person who is seriously negligent, additional tax shall be 25 percent of the amount of the underpaid tax plus 2 percent interest on the amount of the underpaid tax for each month or part of a month that the underpaid tax is not paid.

In the case of a unilateral tax assessment, additional tax shall be 40 percent of the amount of the underpaid tax plus 2 percent interest on the amount of the underpaid tax for each month or part of a month that the underpaid tax is not paid.

Interest shall not be applied during the period of tax re-assessment under article 118 of this law or within 30 days after delivery of the letter of notification for tax collection.

Article 132: Additional Tax for Late Tax Payment

To a person who fails to pay tax by the due date, additional tax shall be imposed at the rate of 10 percent of the amount of the late tax payment plus 2 percent interest on the amount of the late payment for each month or part of a month that the tax amount is not paid.

Where a person fails to pay tax within 15 days after receiving a reminder letter of notification for tax collection, additional tax shall be imposed at the rate of 25 percent of the amount of the late tax payment plus 2 percent interest on the amount of the late tax payment for each month or part of a month that the tax amount is not paid.

In the case of a unilateral tax assessment for the non-submission of a tax declaration, additional tax shall be 40 percent of the amount of the tax assessed plus 2 percent interest on the amount of the tax assessed for each month or part of a month that the tax amount is not paid.

Late interest shall be calculated from the first day of the month following the month in which the tax must be paid. For the tax on profit the late interest shall be calculated from the first day of the following month for which the period for the filing of the declaration of the annual result has already expired.

The additional tax for the late payment of tax on means of transport shall be 100 percent of the tax that must be paid.

Article 133: Additional Tax for the Obstruction of the Implementation of Tax Law

For the obstruction of the implementation of tax provisions the additional tax shall be as below for each act:

1. two million riels for a person or a taxpayer or a withholding agent under the real regime system of taxation or a government official;

2. five-hundred thousand riels for a taxpayer or a withholding agent under the simplified or estimated regime system of taxation.

Section 11: Criminal Violations

Article 134: Power to Sue for Criminal Charges

Except for violations stated in the articles 139 and 140 of this law, legal action to seek prosecution for criminal violations of tax provisions, shall be made by the Director of the Tax Department with the approval of the Minister of Economy and Finance.

Article 135: Tax Evasion

Without prejudice to any other penalties, a director or manager or owner of an enterprise or a person entrusted with a responsibility for an enterprise who commits an act of tax evasion as

stated in article 127 of this law shall be liable to pay a fine from ten million riels to twenty million riels and to imprisonment from 1 year to 5 years or both.

Article 136: Obstruction of the Implementation of Tax

Without prejudice to any other penalties, any person who commits acts obstructing the implementation of tax provisions as stated in article 128 of this law shall be liable to a fine from five million riels to ten million riels and to imprisonment from 1 month to 1 year or both.

Article 137: Aiding or Abetting

Any person who deliberately aids or abets another person to commit criminal violations to this law, or deliberately advises or induces another person to commit such violation, shall be guilty and liable to the same penalty as if he has committed the violation himself.

Article 138: To reveal the Confidentiality

Without prejudice to any other penalties, any person who violates the article 94 of this law shall be guilty of violation of law and liable to a fine from five million riels to ten million riels and imprisonment from 1 month to 1 year or both.

Article 139: Violations by the Tax Officials

Any person who has been assigned to implement tax provisions and who has deliberately committed act as below shall be guilty of a violation of the law and liable for a fine from five million riels to ten million riels or imprisonment from 1 month to 1 year or both:

1. withholding an amount of tax for his own use or for other uses not mentioned in the tax provisions;

2. submitting incorrect reports of the tax amount that he has collected or has received;

3. using his position as tax official to obtain money or other benefits from the taxpayer or other person;

4. collecting or attempting to collect tax without authorization.

Any person who has been assigned to implement tax provisions and who has deliberately requested an amount more than is allowed by law shall be punished for a violation of law according to the criminal law in force.

Any person who has been assigned to implement tax provisions and who has deliberately requested or accepted bribes shall be punished for bribe taking according to the criminal law in force. The person making the bribe shall be punished for offering bribes according to the criminal law in force.

Article 140: Compensation for Misconduct or Mistake

If the taxpayer believes that he has suffered financial loss or personal injury from the improper or illegal activities of the tax administration, the taxpayer can sue for compensation for those losses or injuries to court within three years following the date of the last financial loss or personal injury.

Chapter 6: Closing Provisions

Article 141:

All provisions contrary to this law shall be abrogated.

Article 142:

This law is promulgated urgently.

This law is adopted by the National Assembly of the Kingdom of Cambodia on January 8, 1997 at the 7th session of the 1st legislature.

Phnom Penh, January 8, 1997

President of the National Assembly

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KINGDOM OF CAMBODIA Nation Religion King

Law on Taxation

This law is adopted by the National Assembly of the Kingdom of Cambodia

TABLE OF CONTENTS

Section 10: Additional Tax

KINGDOM OF CAMBODIA
Nation Religion King