Zero-rates supplies for VAT
Subject: Tax

On 10 June 2019, the General Department of Taxation issued Notification 9898 to clarify export services which are subjected zero-rated value added tax.

A. For service supply as completed outside of Cambodia
A service is considered to be performed outside of Cambodia if that service is provided outside of Cambodia by a resident enterprise in Cambodia. The provision of such a service outside of Cambodia may be conducted by a Cambodian resident enterprise through the dispatching and/or hiring of employees or technicians outside Cambodia to perform related tasks outside Cambodia.
Example: Enterprise A [a Cambodian resident] dispatches its employees or technicians from Cambodia or hires employees or technicians outside Cambodia to provide consultancy services on legal, accounting, taxation, trade, data research or analysis, etc. to a non-resident customer who resides outside of Cambodia. This service provision shall be subject to zero-rated VAT.

B. Supply of Service to be used outside Cambodia
i. The provision of a service is considered to be used outside Cambodia if that service is provided by a Cambodian resident enterprise to a non-resident customer for personal use only.
ii. The Cambodian resident enterprise have to take responsibility on the zero-rated VAT, as it is the one who determine that the supply of service is as describe in paragraph i. above.

Example: Enterprise A [a Cambodian resident] provides services for construction design, programming software, or drafting an article for Enterprise B that resides outside of Cambodia. Enterprise A is considered to have provided services for use outside of Cambodia on the basis that Enterprise B will use the design, outside Cambodia with proper documentary evidence as section C below. Thus, this shall be subject to zero-rated VAT.

iii. The provision of a service is not considered to be used outside Cambodia if that service is provided by a Cambodian resident enterprise to a non-resident customer for ang business objective or economic interest that relates to Cambodia.

Example 1: Enterprise A [a Cambodian resident] provides consulting services, such as legal, accounting, tax, trade, data research or analysis, etc. relating to Cambodia for Enterprise B that resides outside Cambodia. Enterprise A is considered to have provided the service in Cambodia for use in Cambodia as this service will be used for a business purpose or economic interest that is connected to the country. The provision of these services shall be subject to 10% VAT.
Example 2: Enterprise A [a Cambodian resident] provides services for testing or checking the quality of goods for export from Cambodia for Enterprise B that resides outside of the country. In this scenario, the service is considered to be provided and used in Cambodia as it is performed on the goods before they are exported from Cambodia. The provision of these services shall be subject to 10% VAT.

C. Documentary Evidence
Taxpayers in Cambodia looking to Charge zero-rated VAT invoices must maintain the following supporting documents:

  1. A contract clearlg specifging the service charge, tgpe of services and the place where the services
    are provided;
  2. Documents showing pagments remitted from outside of Cambodia to a bank in Cambodia for the
    services;
  3. Original invoice; and
  4. Verifiable accounting records.

Advance Grand Formula Co., Ltd is a Cambodian tax agent under license number – TA202204002.

Should you need any further information or support, please contact us at: tax@advancegroupkh.com.