small tax payer vs. medium tax payer - GDT not following Prakas 025

hico11 · Post by **hico11** » Wed Mar 27, 2019 2:01 pm

To my surprise the GDT came back a few days ago and said our small tax payer status business had to move to medium. They would not accept payments as a small tax payer so we are in limbo at the moment.

We are under the $175k threshold as outlined in the Prakas 025. However, the lady in the TK tax office showed me a letter from the GDT boss that listed 315 businesses that need to move to medium. This list was compiled without regard to turnover, just a directive by fiat.

What is the compliance overhead increase from small to medium? I have heard complaints but no specifics.

I was told we could submit a written request to waive or delay the small to medium status change and address the letter to the minister himself. However, I am not sure of the likelihood of success for this type of request.

Any thoughts or suggestions?

https://www.grantthornton.com.kh/insigh ... f.prk.gdt/

Marinaris · Post by **Marinaris** » Wed Mar 27, 2019 2:27 pm

If you're registered at MOC as a company (having a legal form) and your activity is related to IMEX then you'll mostly have to move to medium taxpayer.

Else, my best advice is to do what you can to remain small. The main purpose of going Medium is if your company needs to issue tax invoice including VAT (for company-customers to claim back the VAT).

NotABogan · Post by **NotABogan** » Wed Mar 27, 2019 3:51 pm

Did I hear that all foreigner owned companies need to be medium tax payers?

Aseriousman · Post by **Aseriousman** » Wed Mar 27, 2019 4:51 pm

NotABogan wrote: ↑
Wed Mar 27, 2019 3:51 pm
Did I hear that all foreigner owned companies need to be medium tax payers?

Yes, I remember that too. It changed my mind about registering a small business and being 'legal'. I never saw that it had been implemented in law though. It was just a rumour.
I guess it has been.

Marinaris · Post by **Marinaris** » Thu Mar 28, 2019 12:31 pm

NotABogan wrote: ↑
Wed Mar 27, 2019 3:51 pm
Did I hear that all foreigner owned companies need to be medium tax payers?

Now you mention it ...
There's no law about it but in practice, it's true, GDT prefers to have foreigner as medium tax payer. (If you manage to be small tax payer, do your best to remain small.)

NotABogan · Post by **NotABogan** » Tue Apr 02, 2019 12:40 pm

Marinaris wrote: ↑
Thu Mar 28, 2019 12:31 pm

NotABogan wrote: ↑
Wed Mar 27, 2019 3:51 pm
Did I hear that all foreigner owned companies need to be medium tax payers?
Now you mention it ...
There's no law about it but in practice, it's true, GDT prefers to have foreigner as medium tax payer. (If you manage to be small tax payer, do your best to remain small.)

Yea I think they’ll automatically put you as large or medium then charge you a few hundred to change.

raendi · Post by **raendi** » Fri Apr 05, 2019 6:44 am

NotABogan wrote: ↑
Tue Apr 02, 2019 12:40 pm
Yea I think they’ll automatically put you as large or medium then charge you a few hundred to change.

I don't think so since application for small taxpayer is different that these and you'll also leave application in different place.

NotABogan · Post by **NotABogan** » Thu Apr 18, 2019 6:14 am

raendi wrote: ↑
Fri Apr 05, 2019 6:44 am

NotABogan wrote: ↑
Tue Apr 02, 2019 12:40 pm
Yea I think they’ll automatically put you as large or medium then charge you a few hundred to change.
I don't think so since application for small taxpayer is different that these and you'll also leave application in different place.

This I didn’t know. What are the different places?

raendi · Post by **raendi** » Thu Apr 18, 2019 7:29 am

Small taxpayer application have to left in local tax branch, others in main branch.

NotABogan · Post by **NotABogan** » Sat Apr 20, 2019 9:12 am

Great, thank you for the reply.

hico11 · Post by **hico11** » Thu Jun 25, 2020 5:40 pm

Update: from first post

After many months the GDT/Tax Office would not accept my letter addressed to the minister requesting to remain a small taxpayer. They flatly refused to accept it. I provided a lot of very detailed information but it seems that it is a challenge for a foreigner-owned business to remain small. The 175k threshold is ignored.

I visited both the main office and the TK office multiple times. It turns out there is an internal GDT circular that says to move foreigners to medium no matter what. I am aware that some have remained small but it is not the norm.

Since it is a small school we may just let it go. We have another business that invoices so I plan to register in Singapore , and for the bank account, as more than 50% of revenue is from outside of Cambodia.

Won't be doing this again in Cambodia now that I see how they work.

jackrossi · Post by **jackrossi** » Mon Dec 14, 2020 9:23 am

Just close it and be informal. Or register an off shore office (hk, sing) just so that you have something to invoice from.

Guest9999 · Post by **Guest9999** » Sat Dec 19, 2020 11:51 pm

My friend's khmer wife owns a small school as well. Unfortunately, they just moved into a much nicer building than the one they used to rent. When informed of the move, the tax department demanded she register as a medium sized business. She pointed out that schools in Cambodia have been ordered closed to in person studies nearly 10 of the last 12 months, and that revenue was far, far lower than previous years while expenses were reduced only slightly. It seems a better building is the main thing.

I think the tax department is likely to more angry and aggressive this coming year than ever before. NOT looking forward to it!