Prakas 360MEF. Prk (19 June 2024)
On 19 June 2024, the MEF issued Prakas 360MEF. Prk details the criteria, tax incentives, and obligations to receive the tax incentives upon voluntary registration with the GDT.
Regarding this Prakas, priority Sectors would receive tax incentives upon registration following:
- Wholesale, Retail, and Repair;
- Accommodation and Food Services;
- Handicrafts, and
- Agricultural Co-Operative.
The criteria for classifying a business as an MSME:
| Enterprise | Legal Form | Annual Turnover (KHR-million “M”) | Asset (KHR-million “M”) | Number of Employees |
| Micro Enterprise | Sole-ProprietorshipPartnership | Below 250M | Below 200M | 1 - 4 |
| Small Enterprise | Sole-ProprietorshipPartnership | 250M - 1,000M - Wholesale Retail and Repair, - Accommodation and Food Services, - Agricultural Co-Operative | 200M - 1,000M - Wholesale Retail and Repair, - Accommodation and Food Services, - Agricultural Co-Operative | 5 - 49 |
| 250M - 1,600M Handicrafts | 200M - 2,000M Handicrafts | |||
| Medium Enterprise | Sole-ProprietorshipPartnership | 1,000M - 4,000M - Agricultural Co-Operative | 1,000M - 2,000M - Agricultural Co-Operative | 50 - 199 |
| 1,000M - 6,000M - Wholesale Retail and Repair, - Accommodation and Food Services, | 1,000M - 2,000M - Wholesale Retail and Repair, - Accommodation and Food Services, | |||
| 1,600M - 8,000M - Handicrafts | 2,000M - 4,000M - Handicrafts |
The Tax Incentive for MSME:
| Enterprise | Tax Incentives | Period |
| Micro Enterprise | Exempt from tax registration fee,Exempt from information update feeExempt from Tax ID printing fee. | 2023 - 2028 |
| Small Enterprise | Exempt from any tax liabilities, penalties, and fines for non-compliance before voluntary registration.Exempt from tax registration fee, information update fee, and Tax ID printing fee.Exempt from Patent tax upon registration and for the next two years if successfully registered by 2024 or 2025.Exempt from Prepayment of Tax on Income (PToI), Tax on Income (ToI), and Minimum Tax (MT) for two years after registration. | 2023 – 2028 |
| Medium Enterprise | Exempt from any tax liabilities, penalties, and fines for non-compliance before voluntary registration.Exempt from Patent tax upon registration and for the next two years if successfully registered by 2024 or 2025.Exempt from PToI, ToI, and MT for two years after registration. | 2024 -2025 |
Obligations:
Mirco Enterprise that receives the incentives outlined above is obliged to:
- Report its annual turnover to the GDT between the period of 1 January to 31 March of the following year
- Update the GDT within 15 days if there is any change in its address, name, activities, phone, email, transferred, or closed.
Small and Medium Enterprises that receive the incentives outlined above are obliged to:
- Notify the GDT within 15 days if there is any change in address, structure, name, business objective, owner, manager, authorized tax representative, bank account, contact information, phone number, email, transferred, or closed.
- Maintain proper accounting records and file tax returns, even during the tax exemption period.
- File and pay monthly and annual taxes following the tax regulations.
Our comments:
The informal economy is a key part of the National Strategy for 2023-2028, driving business, employment, and economic development. The government is providing tax incentives to encourage voluntary registration, with a focus on priority sectors. Businesses unilaterally registered by the General Department of Taxation (GDT) do not qualify for these incentives.
There is uncertainty about whether MSMEs that registered with the GDT before 2024 can benefit from tax incentives, and if they can claim tax credits or refunds for taxes already paid. MSMEs may need to submit a tax ruling letter to the GDT for clarification.
MSMEs must meet GDT obligations to keep tax incentives. Failure to do so may lead to incentive revocation.
Please do not hesitate to contact our team for expert support and comprehensive information regarding accounting and tax requirements to ensure adherence to regulations.
