An invoice is a document that a seller furnishes to a buyer in order to request payment. This document usually has a prescribed format and contains details of the transaction. Importantly, this document serves as record of the transaction for both parties, as well as for tax purposes.
In August 2019 the Cambodian Ministry of Economy and Finance issued a regulation, Prakas 723, which provides the guidelines for the proper form and usage of invoices issued in Cambodia. These guidelines came into effect on 1 January 2020.
In order to issue an invoice in Cambodia, you are required to be a registered tax payer. There are 2 types of invoices that can be issued, namely: a VAT Invoice or Commercial Invoice. Each of these types of invoices have specific requirements that must be met.
1. A VAT Invoice must include:
2. Commercial Invoice:
Both Commercial Invoices and VAT Invoices are required to be printed or written in Khmer (the official language of Cambodia), however, English can also be included under the Khmer, but it is not required.
In practice, taxpayers are divided into 3 categories, dependent on their revenue.
Small taxpayers are sole proprietors or partnerships that have an annual taxable turnover of 250 million Khmer Riel (KHR) ($62,500) to 700 million KHR ($175,000). Small taxpayers are directed to issue Commercial Invoices to all customers, irrespective of whether the customers are registered for tax or not. Small taxpayers are required to keep their invoices for a period of 3 years.
Medium taxpayers are enterprises that have an annual turnover of 700 million KHR ($175,000) to 2,000 million KHR ($500,000). Medium taxpayers are directed to issue VAT Invoices to customers who are registered taxpayers and Commercial Invoices to those who are not tax registered. Medium taxpayers are required to keep their invoices for a period of 10 years.
Large Taxpayers are enterprises with an annual turnover that exceeds 2,000 million KHR ($500,000). Similarly, to medium taxpayers, large taxpayers are directed to issue VAT Invoices to customers who are registered taxpayers and Commercial Invoices to those who are not tax registered. Large taxpayers are also required to keep their invoices for a period of 10 years.
The requirements of issuing a Commercial Invoices or VAT invoices as outlined above, do not apply to certain entities such as insurance firms, financial institutions and banks. These institutions are exempt from issuing invoices, as they are required to keep proper accounting records and documentation. Other categories of taxpayers may also be exempt; this, however, is regulated by the General department of Taxation.
Any individual or enterprise who has issued a fake VAT or Commercial Invoice, is required to pay all taxes reflected on the invoice within 7 days from the date of issue. Those who issue improper invoices or who do not issue an invoice, will be subject to an assessment of their taxes and if found guilty may be fined (a maximum of 10 million KHR), may have their business closed or maybe subject to imprisonment (for a period of up to one year).
INS Global has an efficient process to assist you and your enterprise, invoice clients in Cambodia. With more than 14 years of experience in the Asian market, INS Global has a comprehensive understanding of the Asian marketplace and can assist in any invoicing, HR, payroll or tax query you may have.