Tax Update: Tax Rules and Procedures for Trust

• Public Trust – For public benefit, including development funds and social welfare.
• Commercial Trust – For profit, including pension fund, education fund, investments, etc.
• Social Trust – Funded by Settlors’ donations for charitable, cultural, educational, religious, or scientific purposes.
• Individual Trust – Established for personal or specific interests of the beneficiaries.

• Trustee-Company shall register as a medium or large taxpayer
• Independent Trustee may register as small, medium, or large taxpayers based on turnover or fixed assets, as stated in Prakas on Classification of Taxpayer under the Self-Assessment Regime.
• They shall register within 15 working days after the commencement of economic activity or obtaining a license and/or approval from the Trust Regulator.

• Maintain separate accounting records for Trustee and Trust Operations, which is to ensure clear recording of the ownership of properties, incomes, expenses, liabilities and other transactions.
• Follow accounting rules as prescribed under Cambodian Law on Taxation
• Maintain separate accounting records in case there is more than one Trust Operations.

• Trustees are subject to income tax on allowances or commissions earned from managing Trust Operations. Legal entities are taxed at a flat rate of 20%, while physical persons, sole proprietorships, and partnerships are subject to a progressive rate of 0%–20%.
• Property or funds transferred by the Settlor are not treated as taxable income.
• Trust Property is also subject to certain taxes depending on the types of transaction:
• Tax on Rental of Immovable Property: rental income generated from Trust-owned immovable property.
• Capital Gains Tax (“CGT”): applies to income derived from the sale or transfer of capital assets of a Trust.
• Stamp Tax (“ST”): applies to transactions involving the transfer of ownership or contribution of Trust Property, whether movable or immovable.
• Withholding Tax (“WHT”): arises when income is remitted to non-resident taxpayers. However, if such income has already been subject to CGT, it is exempt from additional withholding tax.

Regarding this, Trustees are responsible for recording all transactions, calculating applicable taxes, filing tax returns, and remitting tax payments in compliance with Cambodian tax regulations.

• Any tax exemption provisions shall remain applicable to Trust Property, provided that the eligibility criteria under applicable tax laws and regulations are met.