On October 10, 2024, the Ministry of Economy and Finance issued Instruction No. 025 MEF.SNN on tax obligations of domestic enterprises supplying goods when offering promotional goods or rewards through sales promotion strategies. The key points are:
1. The provision of promotional goods or rewards in the form of inventory for sale:
- These are considered taxable supplies.
- Enterprises producing or importing goods subject to special tax or public lighting tax must pay the appropriate taxes based on market value.
- VAT, prepayment of income tax, and income tax apply at the cost of the goods.
2. The provision of promotional goods or rewards that are not part of the inventory for sale or rewards other than goods:
- These are not subject to VAT, prepayment of income tax, or tax on income.
- VAT paid on these goods cannot be claimed as input credit but is deductible as an expense for income tax purposes.
3. Deductible expenses:
- Expenses for promotional goods or rewards are deductible for income tax, provided they are clearly recorded and properly documented.
4. Other obligations of enterprises:
- Enterprises must establish clear internal policies for promotions, apply them consistently to customers, and publicly announce them.
- For monthly tax filing purposes, a monthly Tax Sale Voucher form no. 1 to 3 must be prepared, including details of promotional goods or rewards, and submitted via e-Filing.
The Ministry of Economy and Finance expects all enterprises to comply with these guidelines effectively.
Summary – Appendix of the instruction no. 025 MEF.SNN, dated 10 October 2024, as followings:
- “ST” refers to Special Tax
- “PLT” refers to Public Lighting Tax
- “VAT” refers to Value-Added Tax
- “PToI” refers to Prepayment of Tax on Income
Promotional goods or rewards in the form of inventory goods/ non-inventory goods for sales | |||||||
Example | Type of supply | Type of goods | ST (3% – 45%) | PLT (5%) | VAT (10%) | PToI (1%) | |
1 |
Enterprise A – Manufacturer (locally produced) of beer and non-alcoholic beverages | Inventory – Beer (Sell & Promotion) |
√ |
√ | √ |
√ |
|
Inventory – Soft drink (Sell & Promotion) |
√ |
n/a | √ |
√ |
|||
2 |
Inventory – Beer (Sell & Promotion) |
√ |
√ | √ |
√ |
||
Inventory – Soft drink (Sell & Promotion) |
√ |
n/a | √ |
√ |
|||
Non-inventory – Prize (Car, Motorcycle, Hat, Cash) | n/a
(Note: these are non-inventory goods as well as not considered as a taxable supply of goods and are allowed as deductible for ToI purposes.) |
||||||
3 |
Enterprise B – Importer of beer and non-alcoholic beverages | Inventory – Beer and Soda (Sell & Promotion) |
n/a |
√ |
√ |
√ |
|
Non-inventory – Promotion (Umbrella) | n/a
(Note: this is non-inventory goods as well as not considered as a taxable supply of goods and is allowed as deductible for ToI purposes.) |
||||||
4 |
Enterprise C – Supplying electronic equipment | Inventory – Air Conditioner (Sell) |
n/a |
n/a | √ |
√ |
|
Inventory – Electric Kettle (Sell and Promotion) |
n/a |
n/a | √ |
√ |
|||
Non-inventory – Promotion (T-shirt) | n/a
(Note: this is non-inventory goods as well as not considered as a taxable supply of goods.) |
||||||
5 | Enterprise D – Car dealership | Inventory – Car (Sell) |
n/a |
n/a | √ |
√ |
|
Non-inventory – Promotion (Motorcycle, Gasoline Voucher, Leisure Travel Ticket) | n/a
(Note: this is non-inventory goods as well as not considered as a taxable supply of goods and is allowed as deductible for ToI purposes.) |
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