Educational Services

Educational Services

Educational Services from Education institutions are non-taxable supply (VAT exemption). Education sector is import role for developing human resource in Cambodia. This may be main reason that Royal Government of Cambodia decided value added tax (VAT) exemption.

Tax Department clarified Education institutions are VAT exemption, so world “Education institution(s)” refers to public and private education institutions providing education services from kindergarten age to higher education. “Education institutions” also include those providing technical and vocational training.

The incentives granted by Prakas 904 are as follows:

1. The payment of minimum tax at 1% on annual turnover is suspended until the end of 2018;
2. Prepayment of profit tax payment is suspended until the end of 2018;
3. Withholding tax payments (in cash or kind) to resident taxpayers that are not real-regime taxpayers in relation to consulting or similar services for the sole purpose of  student education are exempted;
4. Withholding tax payments (in cash or kind) to non-resident taxpayers that are not real-regime taxpayers in relation to management services and other technical services related solely to student education are exempted;
5. The supply of education services and goods or other services related to student education, including the supply of food and student accommodation shall be treated as non taxable supplies.  However, educational institutions are not permitted to claim VAT credits on the VAT input for such goods and services but they are permitted to deduct the VAT expense.

Prakas 904 also reminds education institutions of their obligations under the law on taxation, compliance with which is required to benefit from the incentives provided:

• -Tax registration at the Tax Administration;
• -Filing monthly and annual tax returns to the relevant tax administrations;
• -Accounting books shall be kept properly  as determined by the law; and
• -Education institutions, having an annual turnover of more than 2,000 million Riels shall submit an independent audit report to the relevant tax administration.

Ref: b2b-cambodia