Losses on Transactions with Related Parties

Losses on Transactions with Related Parties for Cambodia Tax

Losses on Transactions with Related Parties are non-deductible expense for Cambodia Tax. Loss on sale of inventory or fixed assets disposal between related parties.

Example 1

ABC is parent company of XYZ .  For this year, ABC sold inventory of $10,000 (excluding VAT) to XYZ company, but cost of inventory is $11,000 ( excluding VAT).

Loss on sale of inventory = $11,000-$10,000= $1,000.

Cambodia Tax Law does not recognize $1,000 as deductible expense even it is expense in accounting record.

Example 2

ABC is parent company of XYZ .  For second year, XYZ  sold inventory of $22,000 (included VAT) to ABC company, but cost of inventory is $33,000 ( included VAT).

Loss on sale of inventory = $33,000/1.1-$22,000/1.1= $3,000-$2,000=$1,000.

For this case, XYZ is subsidiary of ABC , loss on sale of inventory. Cambodia Tax Law does not recognize $1,000 as deductible expense for tax purpose.