GDT clarifies VAT on long-term assets in new guidelines
GDT clarifies VAT on long-term assets in new guidelines
The General Department of Taxation (GDT) has called on owners to effectively participate in the implementation of value-added tax (VAT) payments on the sale of long-term tangible assets.This comes after the GDT noted that some enterprises remain confused about the implementation of VAT.
According to GDT guidelines released on Monday, any enterprise that sells or transfers long-term tangible assets used in the operation of a business, including gifts and supplies, is liable for VAT, charged at 10 per cent of market value.
As stated in Article 64 of the Law on Financial Management, VAT credit claimed on long-term tangible assets will be discontinued once the items are sold or are no longer used in connection with business operations.
Of note, eligible long-term tangible assets that are not claimed for VAT credit, will not be considered sold upon their discontinued use and will not be subject to the 10 per cent VAT. VAT will only be charged upon their sale.
Cambodia Chamber of Commerce vice-president Lim Heng defined ‘long-term tangible assets’ as items used over a long period of time, such as trucks, generators, factory equipment. Business owners must pay the 10 per cent tax to the state when they sell them.
However, he said, the government should delay the taxation of tangible assets until the Covid-19 crisis has abated, so that businesses can find their footing.
The GDT guidelines note that enterprises that make non-taxable supplies as stated in Article 57 of the Law on Financial Management, which have acquired long-term tangible assets but are not allowed to claim VAT credit as provided for in Article 65, are charged VAT at 10 per cent when sold.
The guideline aims to strengthen the effectiveness of law enforcement, clarify tax regulations, making tax administration more transparent and boosting confidence in VAT implementation on long-term tangible assets used in business operations.
It says: “The General Department of Taxation strongly hopes that all self-proclaimed taxpayers operating in the Kingdom of Cambodia will pay close attention to, and follow effectively the content of this directive.”
