Cambodia: VAT Registration Deadline Looms for Non-resident E-Commerce Providers 

December, 2021 - Keovattey Ngoun

The General Department of Taxation (“GDT”) issued new Instruction No. 20522 (“VAT Instruction”) on 8 December 2021 which provides further clarity on the implementation of Sub-Decree 65 S.E and Prakas 542 MEF.P that were both issued earlier this year. The VAT Instruction makes it very clear that non-resident e-commerce providers supplying digital products or services or any e-commerce activities to customers in Cambodia must now register for VAT by  31 December 2021 if their estimated annual turnover for 2021 is more than Khmer Riel (KHR) 250 million (approximately USD62.5k). The VAT Instruction also postpones implementation of the new VAT reverse charge mechanism for self-assessment regime taxpayers who transact with non-resident e-commerce providers.

The key highlights and salient points of the VAT Instruction, followed by more detailed analysis below, are:

Key points: 

  • Non-resident e-commerce entities that supply digital products, services or e-commerce activities to resident Cambodian entities and/or individuals in Cambodia, with estimated annual turnover of KHR 250 million (approximately USD 62,500) from 1 January 2021 to 31 December 2021 must now register via the simplified VAT registration process and do so no later than 31 December 2021;
  • The simplified VAT registration for a non-resident e-commerce provider can be completed by a registered tax agent or the entity itself either in-person or online at
  • The simplified non-resident VAT registration application form – NR-76 – is now available and may be downloaded from
  • Once registered for VAT, non-resident e-commerce providers may remit monthly VAT collected on business to consumer (“B2C”) transactions via a local Cambodia bank that has partnered with the GDT, via credit or debit card, or via a transfer from an overseas account to the GDT’s bank account via an approved partner bank;
  • Non-resident e-commerce providers that register for VAT and use a currency other than KHR will need to apply the exchange rate issued by the National Bank of Cambodia on the last working day of the month in which the supply was made;
  • The implementation of Prakas 542 which includes the reverse charge obligation, has been postponed until 31 December 2021.


Detailed Analysis 

As indicated above, the VAT Instruction was issued to provide greater clarity on the implementation of Sub-decree No. 65 S.E and Prakas 542 that were issued earlier this year – to learn more about these regulations please refer to our earlier updates here and here.

1. Taxable Supplies – Platform Operators

The VAT Instruction re-iterates mandatory VAT registration as in Sub-decree 65 and Prakas 542 for non-resident entities with no permanent establishment (taxable presence) in Cambodia. This assumes such overseas entities supply digital goods or e-commerce services to consumers in Cambodia and exceed the turnover thresholds i.e. USD 62,500 per annum or USD 15,000 in any consecutive three month period.

The VAT Instruction extends the VAT registration requirements to electronic platform operators defined as non-resident taxpayers that supply services, receive payments and deliver digital products and services to end-consumers through electronic platforms in the name of non-resident suppliers.

The role of digital platform operators in the collection of VAT on online sales is a hot topic in many jurisdictions. A recent Thailand regulation provided that both overseas electronic service providers and online platform operators  must register for and pay VAT on electronic services, delivered over the internet from 1 September 2021 onward. 

In the Thai context, if the services are provided through an online platform, the platform operator must remit VAT on behalf of all e-commerce services providers conducting their activities through its platform. It is not required, however, to disclose the particular transactions of each electronic services provider.

If we look at Singapore an electronic marketplace operator (whether local or overseas) conducting B2C supplies of digital services on behalf of overseas suppliers to customers in Singapore may also be regarded as the supplier of the digital services and thus required to register for and charge general sales tax (“GST”) on the supplies.

Looking at Cambodia the VAT Instruction appears to direct that platform operators must account for the VAT of e-commerce service providers if such an operator receives payment and delivers the digital products and services to the consumer on behalf and in the name of the non-resident e-commerce service providers.

2. VAT Registration 

A key distinguisher between Cambodia and its neighboring jurisdictions is its domestic definition of ‘permanent establishment’ (“PE”) which was expanded in 2020 to include the scenario where a non-resident e-commerce provider is deemed to have created a PE in Cambodia if the goods or services they provide are supplied or used in Cambodia.

It is difficult to reconcile the PE’s scope as defined in the 2020 Tax on Income Prakas, with the requirement that non-resident e-commerce providers register for VAT under Prakas 542 and the VAT Instruction which requires that they must not be deemed as having a PE in Cambodia.

From a wider comparative regional lens, Indonesia invoked, but never actually implemented, what is colloquially referred to as a ‘digital PE’ concept in their domestic regulations. This concept revolves around the idea of widening the historic PE test criteria of physical presence or agency to include significant economic presence (“SEP”). The Organization for Economic Cooperation and Development (“OECD”) has been discussing the SEP idea which would allow countries to treat a non-resident as creating a PE even if it does not have an office, store or physical presence there i.e. a PE by dint of an online and economic presence.

The issue for jurisdictions such as Indonesia is that their domestic SEP criteria will not be in lockstep with the recent announcement of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (“BEPS”) with its two pillars that provide for (1) re-allocating a percentage of profits generated by large e-commerce multinationals along with (2) a minimum 15% corporate rate. As signatories to the Inclusive Framework, Indonesia may need to overhaul their current SEP domestic rules when they ratify the recent updates ushered in by the Inclusive Framework.

Cambodia, on the other hand, is not a member of the Inclusive Framework and will not be implementing, in the foreseeable future, Pillars 1 and 2 as above. This calls into question how Cambodia intends to implement its current domestic PE definition with respect to non-resident e-commerce providers. What should also be noted is that Cambodia’s domestic definition of a PE is out of alignment with the PE definition featured in the Double Tax Agreements (“DTAs”) that it has signed to date – noting that the DTA definition of PE would trump the domestic definition of PE.

So what appears to be lacking in the Cambodia context is how a digital PE, created under the current expanded domestic PE definition, is to be enforced and implemented. To date the most practical impact of the broad 2020 definition of PE in Cambodia has been on the withholding tax implications that face non-resident e-commerce providers on B2B transactions with self-assessment taxpayers in Cambodia.  

If Cambodia choose to follow the example of Indonesia and introduce the SEP concept to implement a digital PE it should then consider to provide suitable accompanying criteria. For example Indonesia laid out the following (generalized) criteria, which to date has not been finalized, to determine whether a non-resident e-commerce provider had created a digital PE:

  •  Consolidated gross turnover of the Group reaches a certain threshold;
  • Total in-country sales reaches a certain threshold; and/or
  • Number of active users (purchasers of goods or recipient of service through an e-commerce transaction) in-country reaches a certain threshold.

In the event that Tax on Income cannot be imposed due to the application of a DTA, Cambodia could follow the lead of Indonesia and introduce an Electronic Transaction Tax.

In summary, what is clear in the short-term is that non-resident e-commerce providers will need to register for VAT before 31 December 2021 if their 2021 Cambodian related turnover (sales) are forecast to exceed USD 62,500.

The PE issue is more unclear and it is difficult to predict what treatment the GDT will give to it. What is sure is that the Cambodian Government will not forsake the ability to derive revenue from non-resident e-commerce providers on taxes aside from VAT and we expect further updates on this issue over the course of 2022.

3. VAT Reverse Charge

Most self-assessment regime taxpayers in Cambodia that we have spoken to have struggled with the concept of the VAT reverse charge mechanism that has been introduced for the first time in Cambodia under Sub-decree 65 and Prakas 542. In brief, such self-assessment regime taxpayers, excluding small taxpayers able to avail of a five-year grace period, that make payments to non-resident e-commerce providers, whether they are registered under the simplified VAT system or not, will need to declare and pay the VAT to the GDT on behalf of the non-resident e-commerce providers.

The VAT Instruction defers implementation of the reverse charge mechanism to 31 December 2021. Based on our understanding, January 2022 will be the first month that the reverse charge obligation will apply. This means that the VAT reverse charge will need to be paid/declared from the 20/25th of February 2022 on taxable supplies made in January 2022..

Some of the more common questions that we get asked from our clients on the reverse charge are listed below:

Q. If we pay the VAT reverse charge on invoices received by non-resident e-commerce providers are we still required to withhold withholding tax?

In short, yes – the receipt of a VAT invoice from a non-resident who has registered under the simplified VAT regime will not exempt those invoices from WHT. It should be noted that self-assessment regime taxpayers in Cambodia should be withholding WHT on all payments of Cambodian-sourced income they make to non-residents. Along with technical and management services and royalties, Cambodian-sourced income also includes payments related to business activities carried out by a non-resident through a PE in Cambodia.

A self-assessment taxpayer will receive VAT input credits to offset the VAT reverse charge that it pays to the GDT on behalf of the non-resident e-commerce provider. This is unless the self-assessment taxpayer carries out non-taxable supplies. In this case it would need to expense the VAT reverse charge that it paid on behalf of the non-resident.

Q. How do I know if the payment I make constitutes a digital good, service or e-commerce activity?

Sub-decree 65 provides a definition of digital goods and services and an annexed list of e-commerce activities. There still remains a number of questions such as how are Head Office re-charges dealt with and whether a distinction is made between an e-commerce provider in the business of providing e-commerce activities, and a one-off or intra-group transaction.

Q. What happens if I register under the Simplified VAT regime and on my B2B sales the self-assessment taxpayer is a Small Taxpayer or fails to make the payment under their registered name or bank account?

The VAT Instruction clarifies that in the scenario where a self-assessment taxpayer makes a payment to a VAT registered non-resident e-commerce provider that is not under its registered name or bank account then the VAT registered non-resident e-commerce provider must treat the transaction as a B2C sale and pay and declare the VAT itself to the GDT.

Small taxpayers are not required to pay the reverse charge for five years (from 8 September 2021 onward), so in the event that a VAT registered non-resident e-commerce provider issues an invoice to a Small Taxpayer during this period, it can be assumed that the VAT registered non-resident e-commerce provider would also treat the transaction as a B2C transaction and pay and declare the VAT themselves to the GDT. This has yet to be confirmed by the GDT.

As with all new regulations there will be growing pains associated with implementation of the new e-commerce tax regulations. Cambodia is not alone in this respect with most of its neighbors going through the same ordeals and processes of trial and error as Governments look to grow their revenue share from an ever growing e-commerce market.

For assistance with the VAT registration process or with advice as to how these new regulations will apply to you in practice, please reach out to the author or your usual DFDL advisor.

Tax services required to be undertaken by a licensed tax agent in Cambodia are provided by Mekong Tax Services Co., Ltd, a member of DFDL and licensed as a Cambodian tax agent under license number – TA201701018.






Clint O’Connell

Partner, Cambodia Deputy Managing Director & Head of Cambodia Tax Practice

[email protected]


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