Andersen Global

Sector: Corporate M&A

The National Social Security Fund to Conduct Nationwide Inspections of Entities Throughout the Country

On January 14, 2025, Cambodia’s National Social Security Fund (“NSSF”), issued Notification No. 004/25 to announce that, starting February 1, 2025, it will begin conducting inspections of all entities and establishments throughout the country.    

The purposes of the inspections are to enhance enforcement and strengthen the implementation of the Social Security Law, and to ensure that workers receive the proper benefits and the fund’s financial health is maintained.

If the NSSF finds that the owner or representative of an entity or establishment has not fulfilled the obligations to make declarations and pay contributions on time or report employees’ information correctly, or does not withdraw contributions in accordance with the provisions of the Social Security Law, legal action will be taken against them.

GDT Clarifies Procedure for Permanent Business Dissolution

On September 17, 2024, the General Department of Taxation issued the Instruction on the Procedure to Apply for Permanent Business Dissolution to provide clarification on the process.

Details are as follows:

Notification Requirement

Following the procedure specified in Article 203 of the Law on Taxation, taxpayers are required to notify the tax administration within 15 days of the business’s permanent dissolution.

Prerequisites to apply for permanent business dissolution

Before applying for permanent business dissolution, the taxpayer must first close the accounting books, and file monthly tax returns and the annual income tax return up to the date of applying for permanent dissolution.

Once the tax administration receives the application for permanent dissolution, the taxpayer is no longer required to file monthly and annual taxes.

Application process

Taxpayers can apply for permanent dissolution of a business by one of the following options:

  • Option 1: Online via the website www.registrationservices.gov.kh.
  • Option 2: In person at the tax administration by completing the application form for permanent dissolution (Form 103). The form must be signed by the director, manager, owner, or a legally authorized representative.

Required documents

The following documents must be included with the application:

  • Notification of permanent dissolution of the business
  • Permanent dissolution business form (Form 101)
  • Payment receipt for the stamp duty tax of KHR 1 million on the legal documents relating to the dissolution.

After submitting the application, the taxpayer will receive a letter certifying receipt of the application by the tax administration.

Update on the Transfer Pricing Regulations 2025

Effective 1 January 2025, the Ministry of Economy and Finance (“MEF”) of Cambodia issued Prakas No. 574 (“Prakas No. 574”) on 19 September 2024, which provides additional rules and procedures for income and expense allocation among related parties and requirement for transfer pricing (“TP”) documentation. This is the second TP regulations published by the MEF, which will abrogate the initial Prakas No. 986 and any other regulations that are contrary to Prakas No. 574.

Let’s delve into the key updates and provisions brought forth by Prakas 574:

1. Updates of existing provisions

UpdateDetails
Chapter 1 – General Provision
Article 3 – Definition
  • “Related party” is expanded to cover an enterprise which direct or indirect controls or is controlled by, or is under common control with the taxpayer, or the connection between permanent establishment and non-resident taxpayer.
  • “Control” – means ownership of 20% or more in the value of the direct equity interest in the enterprise or voting power on the board of directors of the company. Notwithstanding this condition, the tax administration may evaluate direct or indirect control based on the specific facts of each case to determine whether control exists.
  • Additional new term:
    • “Transfer pricing” refers to the determining of prices for transactions performed among related parties.
    • “Primary adjustment” refers to an initial adjustment made by the tax administration on the taxpayer’s taxable income as a result of applying the arm’s length principle to transactions between the taxpayer and related parties.
    • “Secondary adjustment” refers to an adjustment that arises from imposing tax as result of a primary adjustment. Secondary transactions may take the form of constructive dividends, equity contributions, or loans.
    • “Median” is the middle value when all numbers are sorted in ascending order. If the number of values is odd, the median is the middle value. If the number of values is even, the median is the average of the two middle values.
Article 7 – Arm’s length rangeThe controlled transaction will not be adjusted if the relevant financial indicator derived from the controlled transaction are tested by an appropriate TP method within the arm’s length range. In contrast, the financial indicator of the controlled transaction that fall outside the arm’s length range will be adjusted to the median of the arm’s length range only in the case of non-reduction or loss of tax.

2. Newly added provisions

ArticleDetails
Article 17 (4) – DocumentationFor taxpayers who have prepared TP documentation for the preceding tax year, the most recently prepared TP document may be utilized for the current tax year, contingent upon the taxpayers’ identification that there have been no significant changes in the controlled transaction and comparability factors that would affect the TP method used, except for the annual preparation of financial indicators for the comparables.
Article 17 (5) – DocumentationLoan transaction from a related party shall be exempt from compliance with the arm’s length principle if the taxpayers can provide supporting loan documents as outlined by the Instruction of the GDT.
Article 17 (6) – DocumentationA resident taxpayer that is not bank and financial institutions shall be exempt from the compliance with the arm’s length principle for loan transactions from related parties and is not required to prepare supporting loan documentation, as outlined in Paragraph 5 of Article 17, if the taxpayer has the following criteria:
  1. An enterprise incorporated for less than three taxable years from the date of tax registration, or
  2. A single member private limited company that enters into a loan transaction with a shareholder, with a loan balance for any period of less than KHR3 billion (approximately US$750,000).
  3. A sole proprietorship with loan transaction from the owner, spouse, or dependent children.
Article 17 (7) – DocumentationThe taxpayer is not required to prepare TP documentation for any taxable year, as stated in Paragraph 2 of Article 17, if the taxpayer meets both of the following criteria for that taxable year:
  1. An annual turnover of less than KHR8 billion (approximately US$2 million) and total assets valued at less than KHR4 billion (approximately US$1 million); and
  2. A total value of controlled transactions less than KHR1 billion (approximately US$250,000) for goods, assets, services, royalties, and other controlled transaction, excluding loan transactions.
Article 18 – Attribution of Profits to Permeant Establishment (“PE”)
  1. In the case that a non-resident taxpayer has a PE in Cambodia, the taxpayer must allocate gross income, deductible amount, or other benefits in a manner that properly reflects the income between the PE and the non-resident taxpayer.
  2. For the purposes of the Paragraph 1 of Article 18, taxable income arising from PE and non-resident taxpayer is defined as the taxable income of a separate and independent enterprise engaged in the same or similar activities under the same or similar conditions. It also includes income from the supply of goods or services of the same or similar business activities of PE, supplied by the non-resident taxpayer in the Cambodia.

Transshipment at the Sihanoukville Autonomous Port

Overview

To streamline the transshipment process while maintaining national security, the Ministry of Economy and Finance issued Prakas No. 337 dated 30 May 2024 on Transshipments at Sihanoukville Autonomous Port (“PAS”), which sets out the rules and procedures for transshipment allowing the transfer of imported goods through Cambodia’s seaport for further export to their destination without being subject to any of the taxes or duties stipulated in Articles 23 and 25 of the Customs Law.

The processes will be supervised by the customs administration. Thus, the General Department of Customs and Excise of Cambodia concurrently issued Instruction No. 2336/24 on the Implementation of Prakas No. 337.

Procedures

There are three types of transshipment operators:

  • Carriers
  • Non-vessel operating common carriers
  • Freight forwarders

Importation process

  • For every transshipment, operators must apply to the customs administration at least 12 hours prior to the arrival of the goods at the PAS via the automated customs system as a one-time declaration covering both the goods’ arrival and their export from Cambodia’s customs territory.
    • Operators can transfer the information on the goods from their own system to the customs system (system to system) or enter the information directly into the customs system.
    • Operators must provide accurate information to customs on the quantity of goods, country of origin, time of arrival, time of re-export, and the means of transportation for import and export, and attach the cargo manifest, waybill, and list of goods.
  • Upon receipt of the application, the customs administration will review and decide whether to accept or reject it within two working hours (from 8am to 5pm) after determining if the information and documents provided are sufficient and correct.
  • When the goods arrive at the PAS, a preliminary verification will be conducted to confirm that the information provided in the application is correct. If no irregularities are found, the transshipment will be processed without delay.

Exportation process

  • When the goods are ready to be exported on to the next country, operators must inform the customs administration via the automated customs system about the goods, means of transportation, and time of export so that they can be cleared from the list of goods declared by the operator.
  • The customs officials will manage the export process and compare the list of goods to be exported with the list of imported goods. If no irregularities are found, the transshipment will be allowed to proceed without delay.

Conditions

  • After receiving approval for a transshipment, operators must complete the transshipment (import to export) within 30 days, with one possible extension of an additional 15 days. Additional extensions will be allowed only if there are valid grounds, such as a force majeure event.
  • Goods prohibited by Cambodian law or that pose a high potential risk to the security, public safety, and well-being of Cambodia will be seized and the operator will have to export them back to the country of origin or destroy them.
  • Operators may request approval from the customs administration to obtain the necessary care for the transshipment, including goods grouping, packaging, labeling, and replacing damaged packaging.  

Penalties

  • Operators that fail to meet the 30-day deadline for the transshipment will be subject to penalties and the goods will be:
    • Confiscated and used locally; or
    • Considered as unclaimed goods; or
    • Required to be exported back to the country of origin.
  • Operators have the right to amended information on the goods prior to their arrival at the PAS, however, if the amendment is made after the goods have arrived, the operator will be subject to penalties.
  • Failure to declare or the misrepresentation of goods are subject to penalties and other measures in accordance with the Customs Law.

The Ministry of Land Management, Urban Planning and Construction Officially Launches Online Public Services

On 9 April 2024, the Ministry of Land Management, Urban Planning and Construction (“MLMUPC”) officially rolled out its new digital public services, aimed at increasing efficiency, convenience, and transparency for service users.

These digital public services represent a significant step in the MLMUPC’s digital revolution and the initiative is a key priority of the first phrase of the Cambodian government’s Pentagon Strategy in optimizing public services. In addition to streamlining current services, the MLMUPC intends to add other online services in the near future, including for property transfers, issuance of land title deeds, and mortgage registration.

Implementation will begin with services from the Phnom Penh Department of Land, Urban Planning, Construction and Cadaster, which is taking the lead. Simultaneously, the MLMUPC is working closely with the Ministry of Interior on expanding the digital public services to the 25 Capital-Provincial Departments of Land Management, Urban Planning, Construction and Cadaster.

Initially, 6 principal services will be available through the online system, focused on the following:

  • Services for construction companies
  • Services for design companies
  • Opening/closing site permits
  • Construction permits
  • Construction certificates
  • Registration by physical persons

In this initial phase, the above service can be requested online through the MLMUPC’s website http://www.mlmupc.gov.kh/, Camdigikey on the Apple App and Google Play stores, or CamDX; users no longer have to physically apply at the Ministry’s one-window service office. However, the full service is not completely digitized—hard copy documents still need to be submitted, and the final approvals and permits are provided in hard copy only. The procedure is as follows:

Step 1: The applicant completes the online application form.

Link for online application: https://service.mlmupc.gov.kh/#

  1. Select the services to be requested.
  2. Fill in the service request form.
  3. Pay the service fee (accepted payment methods include ABA Pay, ACELEDA, Wing, KHQR, Sathapana, and Visa or Mastercard).

Step 2: The applicant submits the application and supporting documents in hard copy to the one-window service office. The application is then passed to the General Department of Inspection for review and a decision.

Step 3: If the application is approved, notification will be sent to the applicant to pick up their final documents/permit at the MLMUPC.

Cambodia Poised to Clarify Profit Attribution and Transfer Pricing of Cross Border Shipping Income

Introduction

The determination and taxation of the Cambodian sourced income of international shipping liners has long posed problems in this dynamic Southeast Asian country. As a longstanding manufacturing hub, imports of raw materials and export of finished and semi-finished products are hallmarks of Cambodia’s robust economy.[1] However, the taxation of shipping lines has been an area of uncertainty and concern for many years.  This was not alleviated when Cambodia introduced transfer pricing (“TP”) in 2017 by means of Prakas 986.

In this note we discuss the source of the uncertainties between the shipping liners and the Cambodian tax authorities (“the GDT”) and the way forward this author has proposed to and is discussing with the authorities. We will update the readers again on the progress of the new draft regulation once it has been issued.

How are Global Shipping Lines Taxed in Cambodia?

Most of the global liners have over the years opened a subsidiary or a branch in Cambodia, and a minority has at least an independent agent in the country. This evolution was prompted by, besides economical and commercia reasons, the need at the time to issue invoices to clients with a local entity to avoid a hefty withholding tax of 14% on service fees paid to non-residents.[2] Accordingly, the model most liners follow is that the Cambodian subsidiary invoices the final customer as an agent of the liner (if in Cambodia) for Ocean Freight, Terminal Handling Charge, Document Fees and other parts of the income), and the non-resident liner invoices the same to the Cambodian subsidiary, Separately or as part of the same transaction, the non-resident liner also pays a compensation to its Cambodian subsidiary agent (“the Subsidiary”). This agent compensation is sometimes based on cost plus over the agent’s expenses, sometimes as a percentage of the gross income involved, or with fixed amounts per type of cargo. In reality, the Subsidiary usually does not do anything much besides this reinvoicing, although some larger offices also provide some import or export services or customer support services.  

Cambodia has no special tax regime or tax rate for income from international transportation. Non-resident shipping lines are subject to the same tax rules as other non-residents, meaning that they are taxed on business income derived through a PE in Cambodia, or on income from services paid from or performed in Cambodia. No detailed guidance existed on how to determine the income of the agent subsidiary. Prakas 986 is a general TP regulation adopting a heavily simplified OECD approach to the arm’s length principle. 

Subsidiaries have generally only included in their income tax returns whatever income they were entitled to under the agency agreement. As mentioned, this was generally a modest service fee based on cost plus, or a modest percentage of the gross income that ran through the invoices of the Subsidiary, or a fixed fee.

The GDT has never really agreed with that approach. The response in tax reassessments following tax audits has not been entirely uniform or harmonized, but in most cases the GDT would reassess a part of the income that was paid to the non-resident liner either as income realized through a PE in Cambodia (for which the Subsidiary is responsible) or, if the income was booked as turnover,  through disallowing the payment to the liner as an expense. The liners, on the other hand, cannot agree with this approach, citing that the tax impost is unreasonably high and not based on any clear legislation or regulation.

The end result is a confusing situation rife with uncertainties and many, many unresolved tax disputes. To escape the deadlock, this author proposed to jointly draft a new Prakas with the GDT.  Below we discussed a few features of the new Draft Prakas.

Attribution of Income to the Agent and the PE?

From the outset, the GDT took the view that two incomes need to be recognized: firstly the income of the Subsidiary Agent and, secondly the income of the PE of the non-resident liner, if any. The GDT also took the view that the mere involvement in the Cambodian market of the liner suffices in most cases to deem there is a PE[3].

Our suggestion was that from a TP perspective, given the limited administrative activity carried out by the Subsidiary, and based on the OECD thoughts on the attribution of income to a PE the activity of the Agent and the PE are one and the same, and it is not possible to assign two incomes to Cambodia under these circumstances.  As was pointed out in the OECD’s Report on the Attribution of Profit to PEs: “there is no presumption that a dependent agent PE will have profits attributed to it. In some circumstances, the functional and factual analysis may determine that the amount to be attributed to the dependent agent PE is negligible”.[4]

The GDT will most likely go ahead with requiring two separate income streams, but it has agreed to lower the effective tax burden by providing a low deemed profit rate as a safe harbor.

Is Cost Plus Method Acceptable in This Case?

The determination of the arm’s length compensation for the Subsidiary agent was a second topic of discussion for several months. Our suggestion was that a cost plus 5% was internationally acceptable and even on the high side for intra group services of a simple administrative services.

The GDT took the view that some groups have marketing activities as well in Cambodia, or perform or arrange for high value import and export services such as assistance with customs clearance.

The GDT will likely adopt several options based on the activity of the Subsidiary.

Various Tax and Transfer Pricing Problems to Be Resolved for Liners

Besides the above mentioned issues, the GDT is likely to address a few other long standing issues in the Draft Prakas such as:

  • Approval for use of receipts that do not meet all conditions for tax invoices to some degree;
  • Confirmation that no additional withholding taxes apply to the income of liners;
  • Conformation of format and assumptions of TP report for logistics and shipping companies.  

[1]    Cambodia had one of the highest GDP growth rates in the region. The World Bank put Cambodia’s GDP growth pre-COVID at 7.1%, exceeding its larger neighbor Thailand (2.4%), closely approximating that of Vietnam (7.4%) https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=KH-VN-TH

[2]    Nowadays, the GDT no longer claims that the general 14% for services paid to non-residents applies to income for ocean freight.

[3]    It is indeed correct that Cambodia’s law on Taxation provides in a far more extensive PE concept compared to the OECD or UN Model DTA. Any “connection” or “facilitation” may trigger a PE, and independent agents may also constitute PE’s. In many cases it may be difficult to maintain that a Subsidiary which is collecting income for the liner does not constitute a PE under Cambodian domestic tax law.

[4]    OECD, as cited page 66.

カンボジアにおける政府開発援助プロジェクトにおける法律及び税務上の問題について知っておくべきこと

ODAプロジェクト実施のために、入札の落札者に求められる事業形態は何ですか。

カンボジアで事業を行うための事業形態

要するに、外国企業が事業を行うためにはカンボジアで事業体を登録する必要がありますが、法人である必要はありません。カンボジアの商業企業法（LCE）によると、3つの形態のいすれかを選択することができます。

  • 駐在員事務所
  • 支店（海外企業の支店であり、負債はすべて海外企業に帰属する）、または
  • 子会社（海外の親会社から独立して責任を負うことができる新会社）

この3つの形態のうち、駐在員事務所はLCEで業務範囲にかなり制限されています。殆どの事業活動を行うことは禁止されています。そのため、外国投資家がカンボジアでプロジェクトを実施する際に採用する形態としては、支店と子会社が一般的です。

カンボジアでのODAプロジェクトの事業形態

カンボジアにおける典型的なODAプロジェクトは、他国の政府または国際機関からODAによって資金提供される政府入札プロジェクトとなります。2021年に官民パートナーシップ法（PPP法）が制定された後、カンボジア政府はODA資金提供者からの具体的な要求を考慮しつつ、PPP法を政府プロジェクトの管理全般に適用する傾向にあります。従って、ODAプロジェクトの事業体の形態に関する具体的な要件を理解するためには、PPP法とその3要素の標準作業手順書（SOP）を参照することが有益です。

PPP法第7条では、契約締結の権利を有する民間事業体は以下と定めています。(i) カンボジアで法的に登録された事業体。(ii) カンボジアで登録された外国商事会社またはカンボジアで登録された特別目的会社。または、(iii) 他の法令に基づき特別な権限委譲を受けた公的機関。 　

上記に記載したとおり、外国投資家がカンボジアでODAプロジェクトを行う場合、支店と子会社の2つの形態が考えられます。LCEは支店に対して「外国人である自然人または法人が禁止されている行為を除き、現地法人と同様に、商品やサービスを定期的に売買し、製造、加工、建設に従事すること」を許可しています。法律上では、支店が建設サービスを実施することが明確に認められているため、外国の建設請負業者がカンボジアでプロジェクトを建設する際に支店を設立することは一般的な選択肢です。一方で、子会社は、外国投資が制限されている以外のあらゆる分野で事業を行うことが可能です。

さらに、ODAプロジェクトの入札者は、事業体の形態に関する特別な要件があるかどうか、入札書類を注意深く確認する必要があります 。

入札者の特別問題

ここではPPP法とその標準手順書（SOP）を考察します。PPP法では、当該プロジェクトの民間パートナーの選定は、一般的に競争入札方法で実施されるものと定めています。直談判／特殊方法は、カンボジア王立政府の承認がある場合にのみ使用することができます。

入札者の基準

入札者資格は、各プロジェクトのプロジェクト情報覚書に記載されています。SOPは入札者の基準サンプルをいくつか提供していますが、特定のプロジェクトの仕様によって変更される可能性があります。SOPに提供されているプロジェクト情報覚書のサンプルによれば、事前資格審査段階での入札者基準は以下のようになります。

  • 本国で正式に登録された個人、法人であるか。或いは前述の事業体で構成されるコンソーシアムであること。　
  • 入札者、コンソーシアムメンバー、または請負業者の3者のうち少なくとも2者が技術的資格を満たしていること。
  • 過去15年以上の必要分野での経験、運営及びメンテナンスの経験、過去のプロジェクト完了証明書等を有していること。
  • 必要な認証、例：ISO9001/ISO14001認証、主要職員の証明書等を有していること。
  • 必要な財務能力資格を有していること。

原則として、カンボジアの現行法に従って事前資格入札者の所有権構成に制限は課されません。

二段階入札の手順　

入札者の選定は、事前資格審査入札を伴う2段階2封筒プロセスで行われるのが一般的です。例外として、5,000万米ドル以下のプロジェクトの場合には、実施政府機関（IA）の所長は一段階手順（事前資格審査の付かない2封筒の入札手順）を使用することができます。

1段階プロセスと2段階プロセスの違いは後者には事前資格審査という追加ステップが含まれることです。入札者が入札書を提出する前に、IAはまず事前資格審査書類の提出を求め、所定の基準を満たすと思われる入札者を確認します。通常は、3～5社の入札候補者を事前資格者としてリストに登録し、そのリストに登録された入札者にのみ入札書類が発行されます。

これは、事前資格審査ステップを逃した入札者は、その後の入札プロセスに参加する資格がないということです。

従って、入札者は、特定のプロジェクトに適用される入札手順に注意し、事前資格審査ステップを逃さないようにする必要があります。

事前資格審査会議及び事前入札会議

2段階プロセスでは、IAは入札参加者と2回の会議を行います。一回目は事前資格審査書類を提出する前、通常は事前資格審査への招待状の発行から 30日以内です。二回目は入札書を提出する前、通常は入札書類の発行から14～45日以内です。両方の会議では、入札者は入札書類と基準の条件を明確にするためにIAに質問することができます。IAは会議の議事録を作成し、会議に出席した入札者に議事録に署名してもらい、そのコピーを入札者に提出します。

これらの会議は事前資格審査基準または入札書類の修正につながる可能性があります。従って、入札者は必ず会議に出席し、会議の議事録を保管する必要があります。

入札の技術的及び財務的評価

SOPによれば、入札書類は技術入札と財務入札に割り当てられる比重を規定するものとし、通常は技術入札が30％、財務入札が70％となります。合計点数の上限は通常1000点で、その結果、技術入札の合計点数の上限は300点、財務入札の合計点数の上限は700点として割り当てられます。技術入札と財務入札の評価点数はこの比率に基づいて調整される場合があります。

入札保証金

入札保証金の額は、プロジェクトの規模によって異なります。金額は妥当なものでなければならない。通常100万米ドルを超えないものとします。入札保証金の有効期間は、入札有効期間満了後少なくとも60日間とします。

入札または契約締結前の入札者の課題

入札プロセスのタイムライン

全体として、PPP法及びSOPは、プロジェクトサイクル全体や入札プロセスの各段階について詳細なタイムラインを示していないが、特定のステップのタイムラインを時に表す場合があります。結局はプロジェクトサイクルの完全な流れのタイムラインは不明です。現在の実務と経験に基づけば、入札者の獲得と契約プロセスには約3ヶ月から6ヶ月かかります。

契約交渉の期限

最上位の落札者が選定されると、IAは落札者とプロジェクト契約締結のための交渉を開始します。PPP法では、交渉開始日から6ヶ月以内に交渉が完了できない場合、IAが次順位の落札者を代わりに契約交渉に招待することができると明確に規定されています。　

これは元の落札者との交渉を終了するための強制的なルールではありませんが、落札者はできるだけ早く交渉を期限内に終了することが望ましいです。

事業体設立

外国企業が入札に参加することは可能ですが、プロジェクト契約を締結する際には、通常、カンボジアに事業体を設立し、登録する必要があります。プロジェクト契約締結前にカンボジアで事業体を設立する必要はありません。SOPでは、落札者はプロジェクト契約締結後、最長60営業日以内に事業体の設立を完了することができます。このようなシナリオでは、新設法人は落札者との間で、プロジェクト契約における落札者の全ての権利と契約上の義務を引き受けるため、法人設立後14営業日以内に更改契約書を締結する必要があります。　

また、プロジェクトの建設が開始される前に、IAと落札者側のプロジェクト事業体によって、多くの事が行われる必要があることに注目してください。例えば、プロジェクト事業体は、詳細なエンジニアリング設計を完了し、環境認可を取得し、主要請負業者と建設契約を締結し、その他の同様な条件を整える必要があります。同様に、IAは所定の期間内に詳細なエンジニアリング設計を承認し、建設開始のために合意された土地を提供し、その他の条件を満たす必要があります。従って、落札者はIAと緊密に協力し、期限を守る必要があります。　

準拠法及び紛争解決

PPP法では、PPP契約はカンボジア法に準拠すると定められています。但し、民間パートナーは、カンボジアの公的事業体が当該契約の当事者でなければ、PPP契約の実施に関連する付帯契約に適用される準拠法を選択することができます。

PPP法は、IAと民間パートナーの間で発生した紛争に関する紛争解決方法を限定していません。紛争解決方法は、話し合われてPPP契約で規定されます。実際に、外国仲裁条項がカンボジア政府によって受け入れられた実例があります。また、紛争に外国の事業体が関与する場合（例、国際仲裁条項等）、或いはカンボジア事業体のみの場合（例えば、国内仲裁の選択）、当事者は異なる方法を選択することになるでしょう。

ODAプロジェクトの納税義務とは。

ODAにはカンボジアのような発展途上国に提供される二国間援助と多国間援助が含まれます。二国間援助は、特に国家を直接支援することを目的としたもので、金融・投資協力が含まれ、コンセッションローン及び無償援助の形で行われることが多いです。特に、国際協力機構（JICA）がODAの一環としてコンセッションローンを提供し、開発推進に重要な長期低利融資を提供しています。 [1]

カンボジアにおけるこれらの開発プロジェクトの多くは、JICAとカンボジア王立政府との間で締結されたコンセッションローン契約を通じて支援を受けています。その結果、ODAプロジェクトの枠組みの中では、円滑な実施と経済成長を促進するため、特定の免税措置が認められています。　

ODAプロジェクト免税の範囲

カンボジアのODAプロジェクトの枠組みの中における免税措置は、プロジェクトの成功促進のために特別に仕立てられたものです。これらの免税措置の範囲は、通常以下の通りです。　

  1. ODA事業の実施に必要な建設資材、工具、機材の免税輸入・再輸出特権。
  2. プロジェクト落札者及びその直接下請業者への、プロジェクト利益に直接関連する取引に係るVATの免除。
  3. プロジェクト範囲内で得た収入に対するプロジェクト落札者への源泉徴収税（WHT）及び法人所得税の免除。
  4. ODAプロジェクトに従事するプロジェクト落札者の従業員に対する給与税（TOS）及びフリンジベネフィット税。

但し、これらの免除はODAプロジェクトに直接関係する活動にのみ適用されることに注意が必要です。この範囲を超える取引はカンボジアの標準的な税法及び規制の対象となります。従って、ODAの免税範囲を理解することは、投資家がカンボジアのODA支援プロジェクトに関与する際、コンプライアンスを確保し、財務上の有益を活用する上で極めて重要です。

ODAプロジェクト参加者の納税義務

2023年5月16日付カンボジア税法（LOT）では、ODA契約を通じてプロジェクト実施に関与する会社は、支店であれ子会社であれ、特定の納税義務を負います。カンボジア国内で組織され、管理され、または主要事業所を有する事業体には、税務上の登録が義務付けられています。

この登録には、すべての税務関連事項を識別するための納税者番号の取得が含まれます。これらの企業はさらに、カンボジアの税制を遵守するために月次及び年次の税務申告を行う義務があります。カンボジアの課税年度は1月1日から12月31日までで、納税申告は翌年の3月31日までに提出します。

ODAに基づく免税が適用されない場合、企業は該当する支払いに対してTOS、FBT、WHTを源泉徴収する義務があります。例えば、ODA案件の道路建設に従事するプロジェクト落札者の支店が、プロジェクトとは無関係の事業開発のために営業担当者を雇用する場合、支店は営業担当者に代わってTOSとFBTを源泉徴収し、納付する必要があります。

税務当局の課題：支店の利益送金に対する源泉徴収税

最近の税務紛争事件を考えると、ODAの落札者、特にカンボジアで支店として営業している落札者は、日本の本社への利益送金について警戒する必要があります。みなし配当金に対する源泉徴収税の課徴に関する最近の事件に例示されるように、租税総局(GDT)が実施する税務調査から1つの重大な問題が生じています。

このような場合、GDTは支店から本社への利益送金は配当として扱われるべきであると主張しています。これは、支店が別法人として、株主に支払われる配当と同様に、親会社に利益を分配していることを意味します。その結果、GDTはこれらのみなし配当に対してWHTを課税しようとします。 これは、受取者（本社）に代わって支払者（この場合は支店）が源泉徴収し、GDTに納税する必要があります。

但し、このアプローチは、特にODAプロジェクトに関与する外国企業の支店の文脈では、議論の余地があります。商業企業法第271条により、支店は本社とは異なる法人ではなく、同一法人です。従って、配当は株主への支払いであり、会社は自分自身に配当を支払うことはできないため、支店から本社への利益送金は配当にはなりません。

この紛争は、不必要な税負担を回避し、税制を遵守するために、ODA資金によるプロジェクトの利益送金に関する法的及び経済的な実態を明確にする重要性を暴露しています。　

税務当局の課題：ODAプロジェクトにおける外国人従業員の給与税

某税務紛争事件において、GDTはODAプロジェクトの枠組みの中で日本人（または外国人）従業員のTOSに異議を唱える税務更正を開始しました。このような税務更正は、みなし給与に左右されることが多く、 GDTは、月収が実際の数字よりも「高いはず」とみなしています。例えば、GDTの監査では、日本人従業員の月給を3,000ドルと仮定することがありますが、実際の給与は1,500ドルです。また、実際には給与を受け取っていないにもかかわらず、取締役が給与を受け取っているという疑惑が生じる場合もあります。

但し、LOTが税務評価に実際収入の使用を強調する規定を明確に概説していることを認識する必要があります。第42（6）条では、カンボジアの源泉給与を国内で稼いだ賃金として具体的に定義し、誇張された仮定ではなく実際の収入に依拠することの重要性を強調しています。

さらに、第46条では、居住者である従業員の課税対象となる月給を強調しており、これには、カンボジア国内と外国の両方から得た収入の合計が含まれます。これらは、支払うべき税金を決定するために実際の収入を使用する必要があることを強調しています。想定される不労収入に基づいてTOSを課すことは、雇用主から従業員に支払われる給与に関するこの基本原則に反します。

従って、ODAプロジェクト参加者は、LOTの遵守を確実にし、外国人従業員のTOSに関するGDTの問題に関連する税務リスクを軽減するために、引き続き注意しなければなりません。

条件

カンボジアの法律や規則は、指令や指示を含めて体系的 に公表されておらず、文書化されていない慣行によって補 足されたり、矛盾したりすることがあります。そのような実 務は、裁判所によって判決されたり、立法機関によって制定 されたりしていない可能性があり、予告なしに変更される 可能性があります。

弊社の法律および税務に関するアドバイスは、カンボジア の法律、規制、および公的実務に対する理解に基づいてい ます。重要なことは、当局や裁判所が弊社のアドバイスに 従わない法律の解釈や適用を採用する可能性を排除でき ないことです。

[1]    JICA. “Official Development Assistance (ODA)and ODA Loans.” Accessed on 19 February 2024 and retrieved from: https://www.jica.go.jp/english/activities/schemes/finance_co/overseas/index.html.

What to Know About the Legal and Tax Implications of Official Development Assistance Projects in Cambodia

What is the required company structure for selected bidders to undertake an ODA project?

Typical entity forms for doing business in Cambodia

Briefly, a foreign business must register an entity in Cambodia in order to carry on a business, but it is not necessary to be in the form of a company. According to the Law on Commercial Enterprise (“LCE”) of Cambodia, a foreign business may choose one of the following three forms:

  • A commercial representative office;
  • A branch of the overseas company, whereby all of its liabilities are still with the overseas company; or
  • A subsidiary, which is a new company that can assume liability independently from the overseas parent company.

Of the three forms, commercial representative offices are the most restricted in terms of the scope of business allowed; under the LCE, they are prohibited from conducting most business activities. Consequently, branches and subsidiaries are the more common forms used by foreign investors to carry out projects in Cambodia.

Form of entity for undertaking ODA projects in Cambodia

The typical ODA project in Cambodia will be a government tendered project funded by ODA from another government or international organization. Since the enactment of the Public Private Partnerships Law (“PPP Law”) in 2021, the Cambodian government tends to apply the PPP Law to the general management of government projects, while taking into account the ODA funder’s specific requirements. Therefore, it is useful to look at the PPP Law and its three-volume standard operating procedures (“SOP”) to understand the specific requirements of the form of entity for ODA projects.

Article 7 of the PPP Law provides that the private entity with the right to enter into a contract must be: (i) an entity legally registered in Cambodia; or (ii) a foreign commercial firm registered in Cambodia or that has a special purpose company registered in Cambodia; or (iii) a public organization that has been specially delegated power in accordance with other laws and regulations.

Thus, in conjunction with our discussion in section above, the two possible forms for a foreign investor to undertake an ODA project in Cambodia are a branch or a subsidiary. The LCE permits a branch to “regularly buy and sell goods and services and engage in manufacturing, processing and construction the same as a local company except any acts that are prohibited for a natural or legal person who is a foreigner.” Since the law expressly permits a branch to carry out construction services, setting up a branch is a common option for a foreign construction contractor to construct projects in Cambodia. On the other hand, a subsidiary enables the foreign investor to conduct any business that is not restricted for foreign investment.

In addition, bidders of ODA projects should carefully check the bidding documents for any special requirement regarding the form of entity.

Particular issues for bidders

In this part, we will look at the PPP Law and its SOP for guidance. The PPP Law provides that by default, the selection of the private partner for solicited projects will be implemented through a competitive bidding methodology. Direct negotiation or selection may only be used with the approval of the Cambodian government.

Bidder criteria

The qualifications for bidders will be set out in the project information memorandum for each project. The SOP provides some sample bidder criteria, which are subject to change depending on the specifications of the particular project. According to the sample project information memorandum provided in the SOP, we summarize below the following criteria for bidders at the pre-qualification stage:

  • Is an individual or legal entity duly registered in its home country; or a consortium comprised of the aforesaid parties.
  • Of the bidder, a consortium member, or a contractor, at least two of the three meet the technical qualifications.
  • Has past experience of 15 years in the required field, relevant experience in operations and maintenance, a certificate of past project completion, etc.
  • Has the required certification, e.g. ISO 9001/ISO 14001 certification, certificates of key personnel.
  • Has the required financial capability qualifications.

In principle, no restriction should be imposed on the ownership structure of a pre-qualified bidder, subject to the existing laws of Cambodia.

Two-step bidding procedure

The default procedure for the selection of bidders is a two-stage, two-envelope process with pre-qualification bidding. One exception is that for projects costing US$50 million or less, the head of the implementation government agency (“IA”) may use a single-stage, two-envelope process without pre-qualification bidding.

The difference between the single-stage process and the two-stage process is that the latter includes the extra step of a pre-qualification exercise. Under this, before bidders submit their bid, the IA will first call for submission of pre-qualification documents to verify potential bidders that meet the predetermined criteria. Typically, it will shortlist three to five prospective bidders as pre-qualified and only issue tender documents to those shortlisted bidders. This means that bidders who miss the pre-qualification step will not be eligible to participate in the subsequent bidding process.

Therefore, bidders should pay attention to the bidding procedures used for the specific project and ensure they don’t miss the pre-qualification stage.

Pre-qualification conference and pre-bid conference

In the two-stage process, the IA will hold two conferences with bidders: one before submission of the pre-qualification documents, usually within 30 days from the publication of the invitation to pre-qualify; the other before submission of the bid, usually within 14 to 45 days from issuance of the bidding documents. Both conferences allow bidders to raise questions with the IA to clarify the terms of the bidding documents and criteria. The IA will prepare minutes of the conference, have the bidders who attend the conference sign the minutes, and provide a copy to them.

These conferences may lead to amendment of the pre-qualification criteria or the bidding documents. Therefore, bidders should ensure that they attend the conferences and maintain records of them.

Technical and financial evaluation of the bid

According to the SOP, the bidding documents will prescribe the weight assigned to the technical bid and the financial bid—normally 30% for the technical bid and 70% for the financial bid. The maximum total score is normally 1,000; thus, usually the maximum total score for the technical bid is 300 and the maximum total score for the financial bid is 700. The evaluated score between the technical bid and the financial bid may be adjusted based on this ratio.

Bid security

The amount of bid security will vary depending on size of the project. The amount should be reasonable, normally not exceeding US$1 million. The validity period of the bid security will be at least 60 days after the expiry of the bid validity period.

Issues for bidders before submitting a tender or signing a contract

Timeline of the bidding process

Although the PPP Law and the SOP do not provide a detailed timeline for each phase in the whole project cycle or for the bidding process, occasionally, they indicate the timeline for a particular step. Consequently, there is not a complete timeline for the full project cycle. Based on current practice and our experience, the procurement of bidders and the contracting process will take about three to six months.

Time limitation for negotiation of the contract

Upon selection of the highest-ranked bidder, the IA will commence negotiation with that bidder to conclude the project contract. It is expressly provided in the PPP Law that if the negotiations cannot be completed within six months from the date the bidder was invited to begin negotiations, the IA may invite the next-ranked bidder to negotiate the contract instead.

Although this is not a compulsory rule for termination of negotiations with the original bidder, it is advisable for bidders to conclude negotiations as quickly as possible.

Establishment of the project entity

While a foreign entity may participate as a bidder, it will usually be required to establish and register an entity in Cambodia when it comes to performance of the project contract. It is not necessary to form the entity in Cambodia before signing the project contract. The SOP allows the winning bidder to complete establishment of the entity within a maximum of 60 working days after the signing of the project contract. In such a scenario, the newly-established entity will sign a novation agreement with the winning bidder to assume all of the bidder’s rights and contractual obligations under the project contract within 14 working days after the entity is established.

It is also worth noting that a number of actions will be required to be undertaken by the IA and the winning bidder’s project entity before the construction of the project can commence. For example, the project entity will need to complete the detailed engineering design, obtain the environmental approvals, enter into a construction contract with the main contractor, and other such conditions. Similarly, the IA will need to approve the detailed engineering design within a given timeframe, provide the agreed land for commencement of construction, and such other conditions. Therefore, the winning bidder needs to work with the IA closely to observe the deadlines.

Governing law and dispute resolution

The PPP Law requires all PPP contracts to be governed by Cambodian law. However, the private partner may select the governing law applicable to any ancillary agreements relating to implementation of the PPP contract, unless a public entity of Cambodia is a party to such agreement.

The PPP Law does not restrict the type of dispute resolution mechanism used for disputes arising between the IA and the private partner. The dispute resolution mechanism will be negotiated and stipulated in the PPP contract. In practice, we have seen foreign arbitration clauses being accepted by the Cambodian government. The parties may also agree on a different mechanism when the dispute involves a foreign entity (e.g. international arbitration), or when it only involves Cambodian entities (e.g. domestic arbitration).

What are the tax obligations for an ODA project?

ODA encompasses bilateral and multilateral aid provided to developing countries such as Cambodia. Bilateral aid, specifically designed to assist nations directly, involves financial and investment cooperation, often in the form of concessional loans and grants. Notably, the Japan International Cooperation Agency (“JICA”) offers concessional loans as part of its ODA, providing vital long-term, low-interest financing for development endeavors. [1]

Many of these development projects in Cambodia receive backing through concessional loan agreements established between JICA and the Royal Government of Cambodia. Consequently, within the framework of these ODA projects, specific tax exemptions are granted to facilitate smoother implementation and foster economic growth.

Scope of ODA project tax exemptions

The tax exemptions within the framework of an ODA project in Cambodia are specifically tailored to facilitate the project’s success. These exemptions usually encompass: (i) duty-free import and re-export privileges for construction materials, tools, and equipment needed for implementing the ODA project; (ii) value added tax exemption for the project bidder and its direct subcontractors on transactions directly tied to the project benefit; (iii) withholding tax (“WHT”) and corporate income tax exemptions for the project bidder on income earned under the project scope; and (iv) Tax on Salary (“TOS”) and Fringe Benefit Tax exemptions for the employees of the project bidder working on the ODA project.

However, it is crucial to note that these exemptions only apply to activities directly related to the ODA project. Transactions beyond this scope are subject to tax under Cambodia’s tax laws and regulations. Therefore, understanding the scope of the tax exemptions under the ODA project is crucial for investors to ensure compliance and leverage the financial benefits.

Tax obligations for ODA project participants

Under Cambodia’s Law on Taxation dated 16 May 2023 (“LOT”), companies involved in project implementation through an ODA agreement, whether in the form of a branch or a subsidiary, are subject to specific tax obligations. Registration for tax purposes is mandatory for entities organized, managed, or having their principal place of business within Cambodia. This registration involves obtaining a tax identification number for unique identification in all tax-related matters. These entities are further obligated to file both monthly and annual tax returns to comply with Cambodia’s tax laws and regulations. The tax year in Cambodia runs from 1 January to 31 December, and tax returns are due by 31 March of the following year.

In cases where the tax exemptions under an ODA project do not apply, companies are obligated to withhold TOS, FBT, and WHT on certain payments. For instance, if a project bidder’s branch that is engaged under an ODA project to construct a road, employs a salesperson for business development unrelated to the project, the branch is required to deduct, withhold, and pay TOS and FBT on behalf of that salesperson.

Tax authority’s challenge: WHT on branch profit remittance

In light of recent tax dispute cases, ODA bidders, particularly those operating as branches in Cambodia, should be vigilant regarding profit remittance to their headquarters in Japan. One significant issue arises from tax audits conducted by the General Department of Taxation (“GDT”), as exemplified by the recent case involving the imposition of WHT on assumed dividend payouts.

In these cases, the GDT asserts that the transfer of profits from the branch to its head office should be treated as dividends. This implies that the branch, as a separate legal entity, is distributing profits to its parent company, like dividends paid to shareholders. Consequently, the GDT seeks to levy WHT on these assumed dividends, which is a tax withheld by the payer (the branch, in this case) on behalf of the recipient (the head office) and remitted to the GDT.

However, this approach is contentious, especially in the context of branches of foreign companies involved in ODA projects. As per Article 271 of the LCE, branches are not distinct legal entities from their head offices but rather extensions of the same entity. Therefore, the transfer of profits from a branch to its head office does not constitute dividends, since dividends are payments made to shareholders, and a company cannot pay dividends to itself.

This dispute underscores the importance of clarifying the legal and economic substance of profit remittances in the context of ODA-funded projects to avoid unnecessary tax burdens and ensure compliance with tax regulations.

Tax authority’s challenge: TOS for foreign employees under ODA projects

In certain tax dispute cases, the GDT has initiated reassessments challenging TOS for Japanese (or other foreign) employees within the framework of ODA projects. These reassessments often hinge on assumed salaries, with the GDT considering that the monthly income should be higher than the actual figure. For example, a GDT audit might assume a monthly salary of US$3,000 for a Japanese employee when the actual salary is US$1,500. In other instances, suspicions may arise about members of a board of directors receiving salaries when, in reality, they are not.

However, the LOT clearly outlines provisions emphasizing the use of actual income for tax assessments. Article 42(6) specifically defines Cambodian-sourced salary as wages earned within the country, emphasizing the importance of relying on actual income rather than inflated assumptions. Additionally, Article 46 highlights the taxable monthly salary for resident employees, which includes the total amount earned from both Cambodian and foreign sources. These emphasize that actual income should be used for determining the taxes owed. Imposing TOS based on assumed, unearned income contradicts this fundamental principle of salary paid by an employer to an employee.

Thus it is important for ODA project participants to be aware of these issues to ensure compliance with the LOT and mitigate the tax risks associated with GDT challenges on TOS for foreign employees.

Qualifications

The laws and regulations of Cambodia are not systematically published, including directives and instructions, and may be supplemented or contradicted by undocumented practice. Such practice may not have been ruled upon by the courts or enacted by legislative bodies and it may be subject to change without notice.

Our legal and tax advice is based on our understanding of Cambodian laws, regulations, and official practice. Importantly, it cannot be excluded that the authorities or the courts will adopt an interpretation or application of the law that is not in accordance with our advice.

[1]    JICA. “Official Development Assistance (ODA)and ODA Loans.” Accessed on 19 February 2024 and retrieved from: https://www.jica.go.jp/english/activities/schemes/finance_co/overseas/index.html.