Tax alert: Additional tax relief measures for airline and tourism sectors to address COVID-19 crisis

In the wake of the Royal Government of Cambodia (“RGC”)’s stimulus package in response to the COVID-19 pandemic, the General Department of Taxation (“GDT”) has introduced further tax concessions for affected businesses.

On 9 April 2020, the GDT issued Notification 9648 GDT (“Notification 9648”) on Additional Tax Concessionary Measures to Support Severely Affected Sectors as a Result of the COVID-19 Global Pandemic. Initial tax relief was addressed in the Ministry of Economy and Finance’s Notification 1313 MEF issued on 25 February 2020. It provided for the suspension of all kinds of monthly taxes for hotels and guesthouses registered with the GDT for four months (i.e. from February to May 2020); however, the temporary relief is only available for businesses located in Siem Reap province. Note that during the suspension period, filing of monthly tax returns and E-VAT statements is still required. Such business will also have their 2020 comprehensive tax audits waived.

With more businesses suffering from the COVID-19 situation, Notification 9648 provides tax relief measures to the airline sector, and expands coverage for the tourism sector. All airline companies established in Cambodia are exempted from their Minimum Tax obligations for three months, from March to May 2020, and are not required to pay Prepayment of Tax on Income during the aforesaid period either.

Further tax relief for the tourism sector covers a wider scope of business activities and locations. Eligibility applies to any enterprises that are currently operating hotel, guesthouse, restaurant, or travel agent businesses registered with the GDT that are located in Phnom Penh, Siem Reap, Preah Sihanouk, Kep, Kampot, Bavet, and Poi Pet, and provides the following tax assistance:

• Exemption from all kinds of monthly taxes for a period of three months, from March to May 2020, although enterprises are still obligated to file monthly tax returns and E-VAT statements during the exemption period.
• Permission to pay their 2019 Tax on Income liability on an installment basis up to November 2020.

We understand that the RGC is working on extending tax relief to other industries and businesses in other locations as well. We will keep you posted as we receive updates from the RGC.

If you have any questions on this alert please contact the undersigned or your usual VDB Loi adviser.

VDB Loi is a network of leading law and tax advisory firms with offices in Cambodia, Indonesia, Laos, Myanmar and Vietnam. We provide the highest quality solutions for transactions and taxation. Our general areas of practice are corporate, finance, licensing and disputes. Our principal specialized areas of practice are energy, infrastructure, real estate and construction, telecom, and taxation.

You can find more information on our Cambodia office here.