by kiwikhmer » Mon Oct 09, 2017 4:00 am
As per most issues in Cambodia the devil is in the detail.
I believe Jackrossi's scenario is based on applying the progressive annual Tax on Profit (now called Tax on Income) rates which can be used by Small Taxpayers under the new Self-Assessed Tax Regime in Cambodia. Limited Liability Company's will never be a classified as a Small Taxpayer regardless of the level of income/profit received. Generally speaking only a sole proprietorship or partnership can be a Small Taxpayer. In addition schools, if they are actually registered for tax, provide what are called non-taxable supplies for VAT purposes - meaning they dont charge VAT on their school fees and conversely cannot claim VAT input. Schools can expense VAT but if they pay out say $10 in VAT and save $2 in tax how can you argue the school pays less unless they pass that cost to the invoicing entity? Under the Prakas on Tax on Salary there is a employee/independent contractor test whereby the tax authorities can, and have, reclassify a individual as a employee or contractor based on the substantial criteria that apply i.e. control test, who sets working hours, risk of receiving compensation etc.
Also - and with all due respect to the teaching profession in Cambodia - the tax authorities will not allow what they consider as exorbitant expenses to be deductible so I guess the "vehicles" and "electronics" reference may need to be scaled down a bit to possibly a secondhand motorbike plus laptop. I guess the upside is being a tax registered business in Cambodia you will have the joy of debating these issues firsthand with the friendly tax auditors at the GDT.
As per most issues in Cambodia the devil is in the detail.
I believe Jackrossi's scenario is based on applying the progressive annual Tax on Profit (now called Tax on Income) rates which can be used by Small Taxpayers under the new Self-Assessed Tax Regime in Cambodia. Limited Liability Company's will never be a classified as a Small Taxpayer regardless of the level of income/profit received. Generally speaking only a sole proprietorship or partnership can be a Small Taxpayer. In addition schools, if they are actually registered for tax, provide what are called non-taxable supplies for VAT purposes - meaning they dont charge VAT on their school fees and conversely cannot claim VAT input. Schools can expense VAT but if they pay out say $10 in VAT and save $2 in tax how can you argue the school pays less unless they pass that cost to the invoicing entity? Under the Prakas on Tax on Salary there is a employee/independent contractor test whereby the tax authorities can, and have, reclassify a individual as a employee or contractor based on the substantial criteria that apply i.e. control test, who sets working hours, risk of receiving compensation etc.
Also - and with all due respect to the teaching profession in Cambodia - the tax authorities will not allow what they consider as exorbitant expenses to be deductible so I guess the "vehicles" and "electronics" reference may need to be scaled down a bit to possibly a secondhand motorbike plus laptop. I guess the upside is being a tax registered business in Cambodia you will have the joy of debating these issues firsthand with the friendly tax auditors at the GDT.