Fasten Your Seatbelts: Turbulence Ahead for the Taxation of International Airlines in Cambodia

If you think air travel already got too expensive, you will not be happy to hear that ticket prices to and from Cambodia might be ready to fly even higher. On 26 September 2023, a recent industry meeting facilitated by the International Air Transport Association (IATA), the airport operator and the General Department of Taxation (GDT), attended by more than 30 airlines serving Cambodia and VDB Loi, highlighted the many tax uncertainties the sector says it faces. True, there are a few new tax laws that may have an effect on how foreign airlines are taxed (such as the revision of the definition of permanent establishment). But the unavoidable vagueness of longstanding general tax rules when applied to international aviation (which is something we see in many countries) plus the impact of the rise of booking tickets online in the last decade, are creating most of the turbulence. Here is what lies ahead on the radar, so to speak.

Highlights

• Is the 10% Cambodian tax on airline tickets also applicable to tickets bought online?
• Which international airlines should pay income tax in Cambodia?
• What is the taxable profit of the Cambodian branch of a non-DTA airline?
• Leasing of aircraft
• A pragmatic way forward