Overview-Value Added Tax

Overview-Value Added Tax (VAT) in Cambodia

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Value Added Tax (VAT) is applicable on the taxable supply of goods and services. An entity registered under real regime is required to charge VAT on all sales of taxable supplies ( VAT from sale is called “VAT output”), and VAT from purchases is called ”VAT input”.

Taxable supplies are the supply of goods, services or imports for taxable sale or for use in producing taxable supplies. Goods are tangible properties except land or money, and services are not goods, land or money.

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 = 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

Transactions of ABC Company for February are as follows.

-Purchase price for product A is $11,000 (included any taxes).

-Selling price for product A is $22,000 ( included any taxes).

-VAT credit for previous month (before February) is $500.

Required

1. Calculate VAT input during February.

2.Calculate VAT output during February.

3.Calculate VAT payable(credit) for February.




Answer 

1. Calculate VAT input 

VAT input occurred from taxable purchase.

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

VAT input =$11,000/1.1 x 10%=$1,000

so VAT input = $1,000

2.Calculate VAT output

VAT output occurred from taxable supply.

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

VAT output =$22,000/1.1 x 10%=$2,000

so VAT output = $2,000

3.Calculate VAT payable(credit) for February

VAT payable (credit) = VAT output – VAT input – VAT credit from previous months=2,000-1,000-500=$500 >0

So VAT payable = $500 . This amount will be paid to tax authority is no later than the 20th day of the following month (March).