Cambodia Issues Tax Incentives for the Education Sector

• On March 2, 2020, the Cambodian government issued Prakas 209, which extends the various tax incentives for education establishments.
• Prakas 209 provides incentives on withholding tax, value-added tax (VAT), minimum tax, and prepayment of tax on income (PTOI).
• Educational establishments include kindergartens, vocational and technical schools, primary schools, and higher education institutions.

On March 2, 2020, the Cambodian government issued Prakas 209, which extends the various tax incentives for education establishments that they were entitled to when they were first introduced in 2016, under Prakas 904.

Prakas 209 provides incentives on withholding tax, value-added tax (VAT), minimum tax, and prepayment of tax on income (PTOI). Educational establishments identified under the law include kindergartens, technical and vocational schools, primary schools, and higher education institutions.

There is a 15 percent withholding tax exemption on interest payments to resident lenders and payments with regards to services related to the education of students. Further, there is a 14 percent withholding tax exemption on interest payments to non-residents and any payments related to the management and technical services directly connected to the education of students.

The supply of goods and services that are connected to the educational services, such as   providing catering and accommodation to students, are considered non-taxable supplies and thus not subject to the 10 percent VAT. 

Scholarship grants are not to be included as taxable revenue for income tax calculations, and the annual minimum tax of one percent is suspended until the end of 2023. The minimum tax is an annual tax equal to one percent of total turnover. This is including all taxes except VAT.

This tax is due if the minimum tax liability (that is, one percent of total turnover) exceeds the corporate income tax (CIT) liability (20 percent of taxable profit).

In addition, there is also a suspension of the monthly PTOI until the end of 2023. The PTOI is a one percent tax rate on monthly turnover, including all taxes except VAT.

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