Importation

Importation of Goods Subject to to VAT for Cambodia Tax

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Imports for taxable sale or imports for use in producing taxable supplies are subject to VAT (VAT input).A supply of services incidental to the import of goods is part of the import of goods.

An entity registered under the VAT provisions is required to charge VAT on all imported goods or finished goods for taxable supplies (it is called output VAT for supply). But entities can offset the VAT paid on purchases ( it is called input VAT for local and imported purchase) against their output VAT.

Goods are tangible properties except land or money. For Example, imported car, computer, building,air-conditioner,LCD,printer, scanner, furniture,phone, wine, beer, cigarette etc are imported goods.

Taxable supplies are the supply of goods for taxable sale except it is supply under scope of VAT Exemption Supply/Non-taxable goods and services

VAT rate is 10% for standard rate. VAT payment for tax authority is as follows.

VAT payable = VAT output[1] – VAT input[2] – VAT credit from previous months[3]

[1] VAT output = selling price included any taxes/1.1 x 10% or

VAT output = selling price included any taxes but before VAT x 10%

[2] VAT input for importation and local purchase

Importation :

For imports, the tax base is the CIF value plus customs duty plus any Specific Tax on Certain Merchandise and Services (“ST”). CIF abbreviated from Cost, Insurance and Freight.

Tax Base for Importation = CIF + customs duty + ST

VAT input =Tax Base for Importation  x 10%

Local Purchase :

VAT input = purchase price included any taxes/1.1 x 10% or

VAT input = purchase price included any taxes but before VAT x 10%

[3] VAT Credit from previous months occur when VAT input is higher VAT output.

Example 1

XYZ is import and export company registered in Cambodia. Company imported and sold many brands of drinking water.The following transactions for December 2018 are as follows.

-Taxable base for importation of drinking water brand A is $20,000.

-Assume that CIF and custom duty ( import tax) of drinking water Brand B are $9,800 and $200 respectively.

-Company Imported machinery for purifying drinking water, and taxable base of importation is $30,000.

-Expense for computer repair (included any taxes) to ABC Company is $110 .

-Sale from drinking water Brand  A is $33,000 (included any taxes).

-Sale from drinking water Brand B is $11,000 (included any taxes).

Required 

Assume VAT credit from previous months is $990.

1. Calculate VAT input during December 2018.

2.Calculate VAT output during  December 2018.

3.Calculate VAT payable(credit) for December 2018.




Answer 

1. Calculate VAT input 

VAT input occurred from local taxable purchase and importation .

Importation:

Tax Base for Importation = CIF + customs duty + ST

But ST does not have for importing drinking water.

VAT input =Tax Base for Importation  x 10%

Tax Base for Importing Drinking Water Brand A =$20,000

Tax Base for Importing Drinking Water Brand B =$9,800+$200=$10,000

Tax Base for Importing machinery (fixed asset) =$30,000

Total Tax Base for Importation = $20,000 + $10,000 + $30,000=$60,000

VAT input from importation = $60,000 x 10%=$6,000

Local Purchase :

VAT input = purchase price included any taxes/1.1 x 10%=$110/1.1 x 10%=$10

VAT input from local purchase = $10

Total VAT input from importation and local purchase = $6,000+$10=$6,010

2.Calculate VAT output

VAT output occurred from taxable supply.

VAT output = selling price included any taxes/1.1 x 10%

VAT output =($33,000+$11,000)/1.1 x 10%=$4,000

so VAT output = $4,000

3.Calculate VAT payable(credit) for December 2018

VAT payable (credit) = VAT output – VAT input – VAT credit from previous months=4,000-6,010-990=($3,000) <0

Amount of $3,000 is VAT credit. This amount will be offset future VAT payable.

Note: 

Value Added Tax (VAT) is applied the duty-paid value of imported  goods but, in practice, it does not include services. There are concessions for exporters and certain tax-exempt entities. Also, cigarettes, alcohol and motor vehicle products imported for the purpose of re-export are exempt from Value Added Tax (VAT).

Imported goods included any associated services. Services connected to immovable property will be deemed to take place where the property is located.