On 5 April 2019, Ministry of Economy and Finance issues Prakas 372 on Adjustment to Implementation of Withholding Tax on Dividend Distribution (Prakas 372).
The aim of Prakas 372 is change the rules of determining the implementation of withholding tax on dividend distribution that resident taxpayers pay to non-resident taxpayers. The scope of this Prakas is applicable to taxpayers under self-assessment regime.
In accordance with Article 26 new and Article 33 new of Law on Taxation, dividend that resident taxpayers pay to non-resident taxpayers is subjected to withholding tax of 14%.
Conversion from a portion or all on retained earning into equity or share capital are not considered on dividend distribution is not subjected to withholding tax. Such conversion shall be considered as proper if following conditions are met:
The enterprise that paid dividend to non-resident taxpayers shall submit the tax return and pay withholding taxes no later than 20th of the following month.
For the purpose of withholding tax, the amount of dividend shall be recorded in the accounting record when it is paid.
Prakas 518 MEF dated 5 May 2017 on Implementation of Withholding Tax on Dividend Distribution shall be abrogated.
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