Student: Chinket Tola ID: UC-60-47-79 Term: VII Major: LAW

Course: Taxation Law Code: LAW312 Lecturer: Than Chanchamnan Shift: Afternoon

Homework
Deadline: October 10, 2013

I. Fiscal Year
1. What is a Fiscal Year? Fiscal year is very important to all countries in over the world. Fiscal year is a crucial period that the state can collect and set taxes, and also it is a period that the government manages its financial system. In other words, according to Oxford Advanced Learners Dictionary, fiscal year or financial year refers to a period of twelve months over which the accounts and taxes of companies or persons are calculated. It also identifies the starting and ending months for a states accounting and taxing period of twelve months.1 2. When does Cambodian Fiscal Year start and end? As mentioned above, the fiscal year is differently determined the beginning and the ending months from one country to another country. In general, the fiscal year is often based on the calendar year for many countries2, but some countries indicate their fiscal year different from the calendar year. To respond, Cambodian fiscal year is a twelve-month period which begins on January 01 and ends on December 31 every year3. More specifically, the taxable year determined by the Ministry of Economy and Finance is more focused on the tax on profit of real-regime-tax-bound company or enterprise, which is counted based on the calendar year (starting on January 01 and ending on December 31)4. Moreover, there are some exceptional cases for those companies and enterprises that are newly created. For a newly-created company or enterprise, the taxable year is calculated for the first year of creation from the date that the company or enterprise is formed to the calendar-ending month

Central Intelligence Agency, CIA. Field listing: Fiscal year. The Work of a Nation. The Center of Intelligence. Retrieved on September 15, 2013 from https://www.cia.gov/library/publications/the-worldfactbook/fields/2080.html 2 Ibid., 3 Law on Financial System for Public. No.NS/RKM/0508/016. May 13, 2008. Article 11. 4 Prakas of Ministry of Economy and Finance on Taxable Year. No.1481SHV.PRKPD. December 31, 2007. Exercise 1.1.

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as normal taxable year (December 31)5, and for the following years, the taxable year is bound to the normal taxable year (calendar year, January 01 to December 31). However, any company or enterprise created in territory of the Kingdom of Cambodia and having ownership more than 51% of equity interest () in the overseas-based company can request for new fiscal year (i.e. it is different from the normal fiscal year) by submitting the request to the General Department of Taxation6. Personally, it is not said about local companies or enterprises for requesting the new taxable year differed from the provided one; thus, it seems to be unclear whether the local companies or enterprises can have the right to do so or not. 3. How is about Fiscal Year in Thailand, Japan, France, the United Kingdom, and the United States of America? As the previous mentioned, the fiscal year is various in any country. The fiscal year in France is counted based on calendar year the same as Cambodia, which means that the financial year of France begins on January 01 and ends on December 31 every year7. As for Thailand and the United States of America, the financial year or fiscal year identifies the beginning month counting on October 01 and the ending month counting on September 30 of every year8. It is shown that Thailand and USA differently determine the fiscal year from other, which can identify their unique system of financial year counting. More interestingly, Japan and the United Kingdom determine the fiscal year similarlythe same month of beginning but different month of ending and different in the day of both beginning and ending. Japanese financial year is designed for the beginning month of April 01 and the ending month of March 319. Focusing on UK, the financial year is deliberated for the starting month of April 06 and the ending month of April 05 of each year10. After a few mentioned examples of fiscal year in some countries, we can assume that the financial year or fiscal year or taxable year is not the same by the country. It is designed for facilitating the administrative work of those own countries.

5 6

Prakas of Ministry of Economy and Finance on Taxable Year. (2007). Exercise 1.1. Ibid., Exercise 1.2 and Exercise 2. 7 Central Intelligence Agency, CIA. Field listing: Fiscal year. The Work of a Nation. The Center of Intelligence. Retrieved on September 15, 2013 from https://www.cia.gov/library/publications/the-worldfactbook/fields/2080.html 8 Ibid., 9 Ibid., 10 Ibid.,

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II. Cambodian Tax and Non-Tax Revenues Based on Law on Finance for Administration 2013
1. What is the amount of projected tax revenue for 2013? Every year, the National Assembly always adopts the Law on Finance for Administration (LFA) to determine all state revenue and expenditure. In each Law on Finance for Administration, the national revenue and expenditure are projected. For instance, Law on Finance for Administration 2013 plans the national revenue in amount of 12,095,073.3 million riels11, and the national expenditure is planned in amount of 12,095,073.3 million riels, the same as the revenue12. Moreover, Law on Finance for Administration 2013 also determines the projected revenue for sub-national administrationsmostly focusing on provincial and municipal administration and district administration. As for provincial and municipal revenue and expenditure, LFA 2013 plans 520,221 million riels13. More considerably, LFA 2013 projects for revenue and expenditure in amount of 80,321 million riels for districts (Srok/Khan)14. Remarkably, a part of all the revenue mentioned above is taken from tax revenue; therefore, how much does tax revenue account? Main source of national revenue is taxes. Thus, the government projects the tax revenue for 2013 in amount of 7,321,114.1 million riels which is 1,040,731.3 million riels (i.e. it is about 16.6%) greater than tax revenue in 2012 (i.e. the projected tax revenue in 2012 was 6,280,382.8)15. The projected tax revenue 2013 is planned to collect from all kinds of taxes imposed by the Government of the Kingdom of Cambodia, including domestic-based taxes totalized 5,784,683.1 million riels and abroad-based taxes in amount of 1,536,431.0 million riels. The sums of 5,784,683.1 million riels of domestic-based taxes (i.e. it is predictably 865,400.3 million rielsabout 17.6%greater than 2012 was) include with seven main tax revenues16: a) individual profit/income taxes quantifying 358,770 million riels: 281,780 million riels of tax on salary and 76,990 million riels of tax on profits of rental lands and buildings;

11 12

Law on Finance for Administration 2013. No.NS/RKM/1212/010, December 26, 2012. Article 1. Law on Finance for Administration 2013. Article 2. 13 Law on Finance for Administration 2013. Article 16-a. 14 Law on Finance for Administration 2013. Article 16-b. 15 Law on Finance for Administration 2013. Table A: National Revenue 2013, category A, group I, type I, p-1. 16 Law on Finance for Administration 2013. Table A: National Revenue 2013, category A, group I, type I, Chapter 70, p-1.

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b) entity income (profit) taxes in sum of 1,203,550 million riels: tax on profits of public enterprises amounting 71,400 million riels, tax on profits of private enterprises totalizing 1,121,270 million riels, and tax on rental lands and buildings of private entities quantifying 10,880 million riels; c) general taxes on property and services totalizing 2,622,759 million riels: 32,000 million riels of private-enterprise turnover tax, 26,840 million riels of privateenterprise value-added tax, 991,430 million riels of public-enterprise value-added tax, 562,520 million riels of imported-value-added tax of petroleum, 112,399 million riels of imported-value-added tax on agricultural goods and services, and 897,570 million riels of other imported value-added taxes; d) taxes on targeted property in sums of 1,418,530 million riels such as special tax on certain domestic goods and services amounting 352,450 million riels, 328,510 million riels of special tax on certain imported goods and services of petroleum, and 737,570 million riels of special tax on other certain imported goods and services; e) taxes on fixed services amounting 151,798 million riles such as 83,048 million riles of tax on casinos and 68,750 million riles of special tax on other certain services; f) taxes on the use of property or implementing actions in amount of 10,485.1 million riels collecting income from domestic licensing; and g) other tax revenue amounting 18,791 million riels such as 4,291 million riels on stamp tax and 14,500 million riels on fines from violating tax provisions. The amounts of 1,536,431 million riels of abroad-based taxes (i.e. it is projected to be 175,331 million riels, about 12.9%, greater than 2012 was) include the two main tax revenues17: a) tax and excise on imports in amount of 1,353,335 million riels such as 758,130 million riels of customs on imported goods and services, 19,000 million riels of ahead-of-taken profits of customs work in importing (
), 326,140 million riels of customs on crude petroleum products, 230,450

million riels of added excise on crude oil for repairing roads, 670 million riels of

17

Law on Finance for Administration 2013. Table A: National Revenue 2013, category A, group I, type I, Chapter 71, pp-1-2.

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profits from sale of customs, 18,195 million riels of fines of importing offenses, and 750 million riels of customs on raw material for production of medicine ; and b) tax and excise on exports in amount of 183,096 million riels such as 16,760 million riels of excise on exported woods, 54,710 million riels of excise on exported rubber, 1,220 million riels of excise on exported agricultural products and other products, 110,000 million riels of profits on administration and visa of exports, and 406 million riels of fines of exporting offenses. 2. What contributes non-tax revenue? The Cambodian national revenue is not only gained from taxes, but also sourced from non-tax revenue. Non-tax revenue is projected in amount of 1,152,664.2 million riels which is 132,390 million riels (about 13%) greater than 2012 was18. This non-tax revenue is collected from five main sources: income from public property (a), income from sale or lease of public property and services (b), income from fining and punishment (c), income from finance (d), and other income and special income (e).19 a) Public property income is projected in amount of 109,542.7 million riels which includes two main sources: income from concession and rental of lands amounting 64,594.5 million riels comprising 2,700 million riels of fishery concession, 20,400 million riels of forestry concession, 28,535.3 million riels of mining concession, and 12,959.2 million riels of lease of unused lands; and public enterprise income amounting 44,948.2 million riels consisting of 44,895 million riels of profits of public enterprises and 53.2 million riels of payment for reduction ( ). b) Income of sale or lease of public property and services is planned to receive in amount of 698,619.5 million riels which takes in four important sources: income from profits of public enterprises, processing administrations and services (
) amounting 332,020.5 million riels

counting 60,800 million riels from civil airline20 ( ) income, 202,452.1 million riels from tourism activity income, 4,340.2 million riels from cultural activity income, 59,979 million riels from income of posts and telecommunications, 662.3 million riels from income of radios and televisions, 24
18 19

Law on Finance for Administration 2013. Table A: National Revenue 2013, category A, group I, type II, p-2. Ibid., 20 It is seems to be unclear whether this translation is correct or not. This term seems to be more appropriate translations, Aeronautics, Civil Aeronautics, or Aerial Navigation. I am still confused with translating this term.

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million riels from water supply income, and 3,762.9 million riels from other income; income from non-profit administrative and service supply in amount of 43,717.6 million riels containing 126 million riels of income from selling damaged equipment and study materials, income from official documents, patents and any publishing, 12.8 million riels of income from goods transporting, 12,452.3 million riels of income from caring services, 150 million riels of income from selling pieces of property and animals, and 16,728 million riels of income from other administrations and services; income from administrative management amounting 305,618.5 million riels consisting of 148,865 million riels from income of embassy administrative work (income from passports and visas), 2,085.1 million riels from income of establishment of enterprises, 1,230.5 million riels from payment of examination permission, 8,003 million riels from selling plagues, 1,991.8 million riels from court fee, 4,466 million riels from land registration and construction services, and 38,977.1 million riels from verifying production quality and standard ( ); and income from leasing immoveable property in amount of 17,262.9 million riels comprising 7,271.5 million riels from leasing public buildings in central administrations, 9.6 million riels from leasing provincial and municipal public buildings (i.e. specialized departments in each province and municipal), 2.4 million riels from leasing equipment and transportations, and 9,979.4 million riels from leasing immoveable property (non-furniture). c) Income from fining and punishment is expected to receive in amount of 2,502 million riels. d) Income from financial managementinterest of lending moneyis proposed to get around 72,000 million riels. e) Special income and other income are projected to get in amount of 270,000 million riels which include 261,677 million riels from income of privatization on public enterprises and 8,323 million riels from selling immoveable property.

III.

Tax Offenses

1. Indicating five tax offenses defined by Law on Taxation (LoT) 1997 According to Law on Taxation 1997, there are many kinds of tax offenses stipulated from articles 125 to 139. The offenses are imposed on both tax officials and taxpayers who violate the provisions in this law. The five main offenses are going to be explained as following: -6-

a) Offense of Revealing Confidentiality of Taxpayers21: Every person who reveals the confidentiality of taxpayers shall be considered as committing an offense of revealing confidentiality. This offense is mostly imposed on tax administration and every person who is or has been an official and agent of the tax administration. These persons need to keep confidential information that they have received from taxpayers during their official duty and performance22. They are allowed to provide information related to taxpayers only permitted by law. However, when they committed this offense, they are subjected to be fined from five million riels to ten million riels or to be punished imprisonment from one month to one year or both penalties are imposed23. b) Offense of Tax Evasion24: Being willfully, knowingly, systematically, and repeatedly violated tax provisions, someone who intentionally reduces or eliminates the tax amount required by tax provisions to be paid is considered to commit offense of tax evasion. They are also considered as tax evaders where they committed the serious tax negligence within two main commissions: 1) committing two times separately within period of three calendar years and 2) committing three or more times within any period of time (i.e. calendar years). The offenders shall be liable to a fine from ten million riels to twenty million riels or to imprisonment from one year to five years or both committed penalties. c) Offense of Negligence and Serious Negligence25: A taxpayer or a withholding agent shall be considered as committing an offense of negligence when they fail to file the tax return or to pay tax due to the date required by law or/and the amount of tax they paid is less than the amount of tax determined by tax provisions (i.e. provided by Law on Taxation 1997) for not more than 10 percent of the latter26. In liability, they are accountable to pay additional tax within 10 percent of underpaid tax plus 2 percent of interest of the amount of underpaid tax for each late payment month or part of a month that the amount of underpaid tax is not paid27. Considerably, the taxpayer or withholding agent shall be considered as

21 22

Law on Taxation. No.NS/RKM/0297/03, February 24, 1997. Articles 94 and 138. Law on Taxation. (1997). Article 94. 23 Law on Taxation. (1997). Article 138. 24 Law on Taxation. (1997). Article 127. 25 Law on Taxation. (1997). Articles 125 -126. 26 Law on Taxation. (1997). Article 125. 27 Law on Taxation. (1997). Article 131, paragraph 1. Also, Rights and Obligations of Taxpayers. (2010). General Department of Tax of Ministry of Economy and Finance, p-13.

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committing an offense of serious negligence where the amount of tax paid is less than the amount of tax that defined by tax provisions for more than 10 percent of the latter. Responding to serious negligence, they are bound to pay additional tax in amount of 25 percent of the amount of underpaid tax plus 2 percent of interest of the amount of underpaid tax for each late payment month or part of a month that the underpaid tax is not paid28. However, the additional tax shall be 40 percent of the amount of underpaid tax plus 2 percent of interest of the amount of underpaid tax for each late payment month or part of a month that the amount of underpaid tax is not paid where the tax29 is unilaterally determined by the tax administration.30 More remarkably, the additional tax for the late payment of tax on means of transportations shall be 100 percent of the must-paid tax31. d) Offense of Obstruction of Implementation of Tax32: Any person shall be

considered as being guilty where he/she fails to keep accounting records and other documents or fails to issue invoices of business transactions; does not allow tax administration to assess accounting records or other documents; miscarries to inform the tax administration about changing of registration, flops to register at tax administration; conducts or provides deceitful records, documents, reports, or other information; deliberately hides or destroys accounting records, documental records, reports, or other information; attempts to obstruct the assessments or collections of taxes; fails to submit a nil tax declaration within 30 days of the date required by law; and on purpose supports all mentioned acts. Not only taxpayer or withholding agent, but also government officials who has committed acts of revealing disallowed confidentiality, of attempting to obstruct the assessments or collections of taxes, and of willfully supporting all two mentioned acts shall be considered as committing an offense of obstruction of implementation of tax. Being found guilty, he/she shall be liable for a fine of additional tax payment of
28

Law on Taxation. (1997). Article 131, paragraph 2. Also, Rights and Obligations of Taxpayers. (2010). General Department of Tax of Ministry of Economy and Finance, p-13. 29 It is referred to Unilateral Tax Determination meaning to the tax where the taxpayer or withholding agent fails to file tax declaration, to properly keep accounting records or financial records, to maintain proper documents, or to provide necessary information to tax administration to properly determine tax; therefore, the tax is unilaterally determined by tax administration and delivered to them (i.e. taxpayer and withholding agent) (Paragraph 3 of Article 116 of Law on Taxation 1997 and page 12 of Rights and Obligations of Taxpayers published by General Department of Tax of Ministry of Economy and Finance). 30 Law on Taxation. (1997). Article 131, paragraph 3. Also, Rights and Obligations of Taxpayers. (2010). General Department of Tax of Ministry of Economy and Finance, p-13. 31 Law on Taxation. (1997). Article 132. 32 Law on Taxation. (1997). Article 128.

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two million riels in case that he/she is the taxpayer, or withholding agent, or government officials of real regime system of taxation; and of five hundred thousand riels in case that he/she is the taxpayer, or withholding agent, or government officials under the simplified or estimated regime system of taxation. e) Offense Committed by Tax Officials33: Any person who is the tax officials (i.e. he/she has been assigned to implement tax provisions) shall be considered to be guilty of violations of the law where he/she intentionally committed act of withholding an amount of tax for his/her own use or for other uses not mentioned in the tax provisions, of submitting incorrect reports about the amount of tax he/she has received, of exercising his/her position as tax officials to obtain money or other benefits from any taxpayer or other persons, and of collecting or making an effort to collect tax without authorization. Lawfully, he/she shall be liable for a fine from five million riels to ten million riels or for imprisonment from one month to one year or both penalties. More seriously, any tax official who has deliberately requested or accepted bribes shall be punished for a crime of bribery34 stipulated in Article 280 of Criminal Code 2009 of the Kingdom of Cambodia, which he/she shall be liable imprisonment from five years to ten years. To be more specific and detailed, this question will be added one more tax offense mentioned in Law on Taxation 1997, which prescribes more about aiding and abetting offense: f) Offense of Aiding or Abetting35: Anyone who on purpose aids or abets another person to commit criminal violations to the provisions of Law on Taxation 1997, or deliberately advises or induces another person to commit such violation, shall be considered as being guilty for aiding or abetting and be liable for the same penalty as if he/she has committed criminal violations himself/herself.

33 34

Law on Taxation. (1997). Article 139. Law on Taxation. (1997). Article 139, paragraph 2. 35 Law on Taxation. (1997). Article 137.

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References:
1. Criminal Code of the Kingdom of Cambodia. No.NS/RKM/1109/022. November 30, 2009. 2. Law on Taxation. No.NS/RKM/0297/03. February 24, 1997. 3. Law on Amendment of Law on Taxation. No.NS/RKM.0303/010. March 31, 2003. 4. Law on Public Finance. No.NS/RKM/0508/016. May 13, 2008. 5. Law on Finance for Administration 2013. No.NS/RKM/1212/010. December 26, 2012. 6. Prakas of Ministry of Economy and Finance on Taxable Year. No.1481SHV.PRK.PD. December 31, 2007. 7. Oxford Advanced Learners Dictionary, 8th Ed. 2010. University of Oxford: Oxford University Press. 8. Obligations and Rights of Taxpayers. 2010. General Department of Tax, Ministry of Economy and Finance. 9. Central Intelligence Agency, CIA. Field listing: Fiscal year. The Work of a Nation. The Center of Intelligence. Retrieved on September 15, 2013 from

https://www.cia.gov/ library/publications/the-world-factbook/fields/2080.html.

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