General Department of Taxation

Tuesday, March 31, 2020
Source/Copyright: General Department of Taxation (GDT) Cambodia

Patent Tax

A. What is Patent Tax?

Patent Tax is a type of annual tax levied on each business activity of taxpayers under the self-declaration regime who conduct business in Cambodia, based on the type of taxpayer and the level of turnover.

B. Tax Exemption

Patent tax is exempted for:

• State institutions, foreign diplomatic or consular missions, international organizations, and technical cooperation agencies of other governments.
• Activities of any organization organized and operated purely for religious, charitable, scientific, literary, or educational purposes, where no part of the property or income is used for private benefit.
• All business activities with an annual turnover below the turnover level of taxpayers under the self-declaration regime.

C. Patent Tax Rates

Patent tax is determined as in the table below:

D. Obligations and Procedures for Tax Declaration and Payment

1. Obligations for Patent Tax Payment

• Patent tax must be paid between January 1 and March 31 every year.
• Patent tax must be paid at the tax administration where the taxpayer’s actual business location is situated, or at partner commercial bank branches of the General Department of Taxation, or through the online tax payment system (e-Payment).
• Starting a new business:
  • Within the first 6 months of the year (January-June): Must pay the full-year patent tax.
  • Within the last 6 months of the year (July-December): Must pay half of the annual patent tax.

2. Procedures for Patent Tax Payment

• One business activity must pay one patent tax.
• Multiple business activities must pay separate patent taxes according to each business activity.
  

  Example: A taxpayer with distinct business activities in import-export, transport, and a hotel must pay 3 patent taxes for these different business activities.

• Activities that are ancillary to the main business activity are considered as a single business activity.
  

  Example: A hotel that has an entertainment club, restaurant, massage parlor, fitness center, or other activities that are ancillary to the hotel activity under the direct management of the same taxpayer and located within the same premises as the hotel, is required to pay only one patent tax.

• Taxpayers who have branches, warehouses, factories, or workshops for the same business activity within the same capital/province are required to pay only one patent tax.
• Taxpayers who have business activities in different capitals/provinces must pay patent tax to the respective capital/province where the business is located.
• Note: Taxpayers who have branches, warehouses, factories, or workshops for the same business activity located in different capitals/provinces must pay the minimum patent tax for each type of taxpayer to the respective capital/province where the business is located.

3. Patent Tax Certificate

• The patent tax certificate is valid only for the taxpayer named in the certificate. For a business that has already paid patent tax, a new patent tax must be paid if:
  • Changing the location to another capital/province, or
  • Changing to a new type of business activity.
• In participating in bidding, price consultations, or price surveys for the supply of goods or services, taxpayers must hold a patent tax certificate specifying their business activity in accordance with the objective of the bidding, price consultation, or price survey.
• The tax administration shall issue the patent tax certificate to the taxpayer after the patent tax has been paid in full.
• Taxpayers are obligated to display a valid patent tax certificate at their business location. Failure to display the patent tax certificate shall be considered an obstruction to the implementation of tax provisions.
• Taxpayers who pay patent tax through the online tax payment system (e-Payment) can print the patent tax certificate from the system by themselves.

4. Cessation, Suspension, or Change of Business Owner

Enterprises requesting to cease or suspend business operations in any tax year:

• Are required to pay half of the annual patent tax if applying for cessation or suspension during the first 6 months of the year.
• Are required to pay the full annual patent tax if applying for cessation or suspension during the last 6 months of the year.

For a business that changes owners, if the old owner has already paid the patent tax, the new owner is not required to pay the patent tax again, provided that both of the following conditions are met:

• A – Do not change the business activity.
• B – The new owner is the parent, spouse, child, or legal heir of the old business owner.