Patent Tax in Cambodia

Patent Tax is exempted in the following cases:

• State institutions, diplomatic or consular missions, international organizations, and technical cooperation agencies of foreign governments.
• Activities of any organization that is established and operated solely for religious, charitable, scientific, literary, or educational purposes, and where no part of its assets or income is used for private benefit.
• All business activities whose annual turnover is below the threshold specified under the self-assessment tax regime.

1. Obligation to Pay Patent Tax

• Patent Tax is payable annually from 1st January to 31st March.
• Patent Tax must be paid at the tax administration where the taxpayer’s actual place of business is located, or through partner commercial banks of the General Department of Taxation, or via the online tax payment system (e-Payment).
• For newly established businesses:
  • If business operations begin during the first 6 months of the year (January–June), the full annual Patent Tax must be paid.
  • If business operations begin during the last 6 months of the year (July–December), only half of the annual Patent Tax must be paid.
• Patent Tax payment is determined as follows:
  • One business activity requires payment of one Patent Tax.
  • Multiple business activities require separate Patent Tax payments for each activity.

Example:

A taxpayer conducting import–export, transportation, and hotel businesses must pay three Patent Taxes for the three different business activities.

• Business activities that are complementary to a main business activity are considered a single business activity.

Example:

A hotel that has a nightclub, restaurant, massage service, fitness club, or other ancillary activities that are directly managed by the same taxpayer and located within the same premises as the hotel is required to pay only one Patent Tax.

• A taxpayer with branches, warehouses, factories, or workshops for a single business activity located within the same capital or province is required to pay only one Patent Tax. A taxpayer conducting business activities in different capitals or provinces must pay Patent Tax separately for each capital or province where the business is located.

Note:

A taxpayer with branches, warehouses, factories, or workshops for a single business activity located in different capitals or provinces must pay at least the minimum Patent Tax applicable to the taxpayer category for each capital or province where the business operates.

2. Patent Tax Certificate

• A Patent Tax Certificate is valid only for the taxpayer whose name appears on the certificate. For a business that has already paid Patent Tax, a new Patent Tax must be paid again if:
  • The business location is changed to another capital or province; or
  • The business activity is changed to a new type of business.
• When participating in bidding, price consultation, or price quotation for the supply of goods or services, the taxpayer must have a Patent Tax Certificate that certifies that their business activity matches the subject matter of the bidding, consultation, or quotation.
• The tax administration shall issue the Patent Tax Certificate to the taxpayer after the Patent Tax has been fully paid.
• Taxpayers are obliged to display a valid Patent Tax Certificate at their place of business. Failure to display the Patent Tax Certificate is considered an act of obstruction of the enforcement of tax laws.
• Taxpayers who pay Patent Tax through the online tax payment system (e-Payment) may print the Patent Tax Certificate themselves from the system.

3. Cessation, Suspension, or Change of Business Ownership

For an enterprise that applies to cease or suspend business operations in any tax year:

• It is required to pay half of the annual Patent Tax if the application to cease or suspend business operations is submitted during the first six months of the year.
• It is required to pay the full annual Patent Tax if the application to cease or suspend business operations is submitted during the last six months of the year.

For a business that undergoes a change of ownership, if the former 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:

1. There is no change in the business activity; and
2. The new owner is the father, mother, husband, wife, or child of the former business owner.

If you have any queries on this tax or on any Cambodian tax matter, please contact us at 023 216 717 or [email protected].