Following the issuance of Instruction No. 18412 on the Implementation of Tax Incentives for Micro, Small, and Medium Enterprises for the Development of the Informal Economy, the Ministry of Economy and Finance issued Prakas on Guidelines for the Implementation of the Sub-Decree on Tax Incentives for the Development of the Informal Economy on June 19, 2024. This Prakas provides the definitions of Micro, Small, and Medium Enterprises (“MSMEs”), which mostly align with Prakas No. 009 on the Classification of Taxpayers According to the Self-Assessment Regime dated January 12, 2021. As a result, MSMEs operating in four priority sectors, namely (1) wholesale, retail, and repair services, (2) accommodation and food services, (3) handicrafts, and (4) agricultural cooperatives, may be entitled to several tax incentives if they voluntarily register with the tax administration.
Definition of Micro, Small, and Medium Enterprises:
Classification criteria | Micro Enterprise | Small Enterprise | Medium Enterprise |
Turnover in million riels | > 250 | ||
– Agricultural cooperative | N/A | 250 – 1000 | 1000 – 4000 |
– Accommodation, and food services, wholesale, retail, and repair | 250 – 1000 | 1000 – 6000 | |
– Handicraft | 250 – 1600 | 1600 – 8000 | |
Assets worth in million riels | > 200 | ||
– Agricultural cooperative, | N/A | 200 – 1000 | 1000 – 2000 |
– Accommodation, and food services, wholesale, retail, and repair | 200 – 1000 | 1000 – 2000 | |
– Handicraft | 200 – 2000 | 2000 – 4000 | |
Employee | 1-4 | 5-49 | 50-199 |
Form | Sole Proprietorship and Partnership | Sole Proprietorship and Partnership | Legal Person, Representative Office |
The Tax Incentives are Granted as Follows:
Report annual turnover | Update corporate information changes | Keep accounting record | Monthly and annual tax filing | |
Micro Enterprise | ✔ | ✔ | n/a | n/a |
Small Enterprise | n/a | ✔ | ✔ | ✔ |
Medium Enterprise | n/a | ✔ | ✔ | ✔ |
- Exemption of patent tax upon registration, and the subsequent 2 years
It is important to note that unilateral registrations done by the tax administration, and failure to register within 15 days following the reception of a second invitation to register are not considered voluntary tax registration. Additionally, Micro, Small, and Medium Enterprises (MSMEs) must comply with certain key obligations, detailed in the ‘Tax Update: New Instructions on Tax Incentives for MSMEs.”
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