Hot Tax Dispute Issues – And How to Solve Them

A tax official in the USA once said to the taxpayer he was auditing: “This will go a lot easier if you stop thinking about it as if it is your money”. No business enterprise enjoys tax audits, but they are a fact of life, also in Cambodia. Large tax disputes with the GDT that drag on for too long are a real threat to enterprise continuity and the morale of executives. All the more reason to minimize the grey area tax authorities can seize upon, and to prepare your business thoroughly to a challenge. We help you along the way with this highly practical webinar, listing and explaining the most common issues tax officials in Cambodia may look for during tax audits. With the expertise of VDB Loi’s renowned tax controversy team, an team of tax professionals exclusively dedicated to disputes with the GDT, we share which issues you can win, and how.

Highlights:

1. Directors without salary: A common point of contention between taxpayers and the GDT. Can a director still be taxed even if has no salary?  How can you counter such an assessment?

2. Deemed profit margins: We have seen this in construction companies and services. The GDT may in some cases be reluctant to accept the declared profit and instead calculate its own taxable profit based on applying a “market rate profit margin” to the taxpayer’s costs or his turnover. If you do not accept this, can you win?

3. Transfer pricing attacks: The GDT may seize upon group transactions such as service fees, agency fees, which keep the net profit of a Cambodian subsidiary low. Particularly, we see this in logistics, hospitality and various service industries. Our team has regularly won in these cases. How did we do it?

4. Customs value vs. invoice values:  Discrepancies between customs duty imposed values, often based on customs own minimum values, and commercial invoices leads to income tax or withholding tax assessments. How to defend yourself against this more recent issue?

5. Loans:  Borrowing from shareholders without interest, advancing money to group companies without interest, loans that are simply rejected by the GDT. All three are common issues in tax audits, and some are avoidable. Can you win this issue?

6. Pass-through payments treated as revenue:  Payments that are cost-reimbursements, payments made on behalf of someone else, disbursements made which are not an income. In some cases, the GDT may seek to impose VAT, Profit Tax or withholding taxes. How do you prepare your case when challenged?   

7. Taxes triggered by a transfer of shares:  Even before the Capital gains Tax is formally implemented, the GDT has at times assessed share transfers with tax imposts. What happened in these cases? How can we best fight off such an attack?
8. Fringe Benefits, Deposits, Discounts/free items