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VAT Guideline on Business Asset Disposals

VAT Guideline on Business Asset Disposals

June 16, 2020

On 5 May 2020, the General Department of Taxation (“GDT”) issued a guideline on the value added tax (“VAT”) treatment of business asset disposals. The guideline specifies the following three points with regard to VAT on business asset disposals:

  1. Where the input VAT on a business asset was allowed as a tax credit, the subsequent disposal of that asset is a taxable supply at the fair market value.
  2. Disposal of a business asset is a non-taxable supply if the asset:
    1. Has associated input VAT that was not allowed as a tax credit and instead was added to the cost of the asset;
    2. Is a non-taxable supply;
    3. Is subject to state-charged VAT;
    4. Is subject to 0% VAT; or
    5. Has been entirely depreciated (i.e. accumulated depreciation equals the cost of the asset).
  3. Capital gains arising from the sale (i.e. the difference between the selling price in the market and the undepreciated amount of the asset) are considered as other income, which is subject to Tax on Income, regardless of whether or not the disposal is subject to VAT.

The guideline provides clear answers to many of the questions taxpayers have been asking. However, there is still one remaining issue, which is how to determine the fair market value when taxpayers just dispose of or donate assets instead of selling them.

There has been no further clarification from the GDT on this matter as yet. We will keep you posted if we receive any updates from the GDT.

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


An ACCA-qualified adviser, Sivila is an expert in Cambodian taxation with over 10 years of tax consulting experience, including several years with Big 4 firm KPMG.

At VDB Loi, he advises on tax structuring, disputes, and controversy, and conducts tax due diligence for clients across a range of industry sectors, including financial services, telecommunications, real estate, and garment manufacturing.

Sivila is also an associate member of the Kampuchea Institute of Certified Public Accountants and Auditors (KICPAA).

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With UK and Australian accounting qualifications, and a Master’s of Tax from the University of Melbourne, Bunhuy brings a wealth of international and local tax and accounting experience to his work at VDB Loi. His strong grounding in tax compliance, advisory, and internal audit, and his managerial role with Big 4 Firm Deloitte gives him a unique perspective that provides added value to VDB Loi’s clients. Bunhuy conducts tax reviews and due diligence, and advises on market entry, structuring, and transfer pricing for clients across a range of industry sectors, including financial services, consumer goods, real estate, and garment manufacturing. He speaks Khmer, English, and Mandarin.

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