In this episode of B2B Cambodia’s 'Tax Update', Vajiravann Chamnan, Tax Director at DFDL Cambodia, helps us to break down all there is to know about tax amnesty, as specified under Prakas No. 071 MEF.P.GDT on 'Incentives for the Voluntary Correction of Tax Declarations', dated January 30, 2024.
What Is The Purpose Of Prakas No. 071?
Tax amnesty refers to a limited-time opportunity offered by the government that allows taxpayers to voluntarily amend their tax returns by disclosing incorrect past declarations and paying the tax owed in exchange for penalty exemptions.
"The purpose of Prakas No. 071 we understand is to modify the previous Prakas No. 217 on voluntary amendment and tax incentives for the taxpayer," explained Vajiravann. "Prakas 071 applies to self-assessed taxpayers or withholding tax agents who acknowledge they unintentionally made an incorrect declaration of return. The Prakas encourages them to make a voluntary amendment in order to receive tax amnesty – an exemption from penalties, interest and other tax obstruction from the GDT."
Prakas 071 provides more flexibility to taxpayers as it extends the deadline to amend past tax returns to the end of June 2024.
Who Does Tax Amnesty (Prakas 071) Apply To?
Tax amnesty as stipulated under Prakas No. 071 applies to all self-assessment taxpayers in Cambodia (small, medium and large taxpayers).
"The key point is this Prakas applies to taxpayers who unintentionally made errors or were negligent in declaring their tax returns. They need to identify the issue [that caused] the underdeclared tax, related to an unintentional error or mistake made in the accounting record or in the reporting of income, profits or expenses," said Vajiravann.
Main Points Businesses Should Be Aware Of Regarding Tax Amnesty (Prakas 071)
Vajiravann outlined the key points businesses should know about Prakas 071 as:
- Tax amnesty under Prakas 071, for the Voluntary Correction of Tax Declarations, only applies to transactions or financial reports made before January 2024.
- Amendments should be made before the issue is discovered in a tax audit – penalties will be exempted only if the disclosure is made before the issue is discovered by the tax auditor.
"From a conservative tax perspective, it is better to do the voluntary amendment before receiving a draft reassessment from the tax auditor, or before receiving the notice of tax audit, just to be safe... From our point of view, [when] the auditor provides a draft tax reassessment, we believe that at this point of time the auditor [could have] already discovered the tax issue, so when the taxpayer wants to make an amendment, the tax amnesty or incentive under Prakas 071 might not be applied," Vajiravann added.
Watch the full video for all the details.