Charitable Contribution for Tax on Income / Profit

Charitable Contribution for Cambodia Tax

Companies run business in Cambodia and good social responsibilities, so they may make charitable contribution to various charitable institutions such as Cambodian Red Cross (CRC), Kantha Bopha Hospital etc. These contributions can be recognized as deductible expenses for tax on income (profit). But deductible expenses limited to an amount equal to 5% of taxable income, without taking the charitable contribution deduction.

Contribution amount above 5% is non-deductible expense permanently for tax on income (profit), so it cannot deduct from tax on income (profit) forever.

Example 1

ABC is good social responsible company in Cambodia. Company is subject to tax on income (profit) 20%.  During year 2018, ABC Company earned profit of $20,000 (accounting profit) after deducting charitable contribution $2,000 to Cambodian Red Cross (CRC).

Required

Assume profit after adjustments (E35 in tax on income (TOI) form) per Law on Cambodia Tax is $30,000.

1. Calculate deductible contribution amount allowed to deduct from tax on income (profit).
2. Calculate Non-deductible charitable contribution amount for tax on income (profit).

Answer

Deductible expenses limited to an amount equal to 5% of taxable income, without taking the charitable contribution deduction.

1.Deductible contribution amount

Based on calculation table (F5) above, deductible contribution amount for tax on income (profit) in Cambodia is $1,600.

2.Non-deductible charitable contribution

Based on calculation table (F6) above, non-deductible contribution amount for tax on income (profit) in Cambodia is $400.