This service account insists on originality. The author is Zhang Xiaoming, partner of Zhuozhi (Cambodia) Accounting Firm, three years of multinational enterprise management experience, six years of listing audit experience, five years of entrepreneurial experience, Chinese certified public accountant (CPA), international certified public accountant (ACCA) ). WeChat: 13928404895, 085502018

China-Cambodia Bilateral Tax Agreement

1. Overview of tax treaties

An international tax treaty refers to a written agreement signed by two or more sovereign countries or regions through negotiations on taxation matters based on the principle of reciprocity in order to coordinate the tax distribution relationship between each other. International tax treaties have played an important role in avoiding double taxation, which is of great significance for improving the domestic investment environment, vigorously implementing the "bring in" strategy, and the "going out" strategy of Chinese enterprises. For Chinese residents who intend to invest abroad, they should pay attention to whether China has signed a tax treaty with the investment target country, understand the specific content of the relevant treaty, and implement more effective tax planning and commercial arrangements with the help of relevant regulations, so as to be effective Reduce the tax cost and tax risk of foreign investment. When President Xi Jinping visited Cambodia in October 2016, he signed the "Agreement on Avoiding Double Taxation and Preventing Tax Evasion on Income" (hereinafter referred to as the "China-Cambodia Agreement") and a protocol with Cambodia. According to Article 28 of the China-Cambodia Agreement, this Agreement shall apply to income obtained during the tax year beginning on January 1 of the following year of the effective year of this Agreement and thereafter. There are 29 articles in the China-Cambodia tax treaty, the main part of which stipulates the scope of application, the identification of permanent establishments, the taxation of different types of income, non-discriminatory treatment, mutual negotiation procedures, and information exchange. The following will introduce the above contents in detail one by one.

2. Scope of Agreement

2.1 The scope of the person

This agreement applies to persons who are residents of one of the Contracting States or both.

2.1.1 Definition of "resident of a Contracting State"

The term "resident of a Contracting State" refers to a person who is obligated to pay taxes in the Contracting State due to the domicile, domicile, place of establishment, location of the actual management organization, location of the management organization, main place of business, or other similar standards in accordance with the laws of the Contracting State. It also includes the State Party and its local authorities. However, this term does not include persons who are liable to pay taxes in that State Party solely because of income derived from that State Party.

2.1.2 Rules for determining the identity of individuals who are residents of both Contracting States

For individuals who are residents of both Contracting States, their identity shall be determined in accordance with the following rules:

(1) It should be regarded as only a resident of the country where its permanent residence is located; if there are permanent residences in both Contracting States, it should be regarded as only a resident of the Contracting State with a closer personal and economic relationship (where the center of important interests is located);

(2) If the country where the center of its important interests is located cannot be determined, or if neither party has a permanent residence, it shall be considered as a resident of the country where its habitual residence is located;

(3) If they have or do not have habitual residence in both contracting states, they shall be regarded as only residents of the country to which their nationality belongs; (4) If there is a problem of dual nationality, or if they are not nationals of either contracting state, both contracting states shall be responsible The authorities should resolve it through negotiation.

2.1.3 Other situations

Anyone other than an individual is a resident of both Contracting States at the same time, and the competent authorities of the Contracting States shall settle the matter through consultation.

2.2 Scope of taxes

2.2.1 The scope of application of this Agreement

This Agreement applies to taxes levied on income by a Contracting State or local authorities, regardless of the method of collection.

2.2.2 Taxes levied on all income or certain income

Taxes levied on all income or certain items of income, including taxes levied on gains from the transfer of movable or immovable property, and taxes levied on total wages or salaries paid by enterprises, shall be regarded as taxes levied on income.

2.2.3 Existing taxes to which this Agreement shall be particularly applicable

The current taxes to which this Agreement shall be particularly applicable are:

(1) In Cambodia:

① Profit tax, including withholding tax, minimum tax, dividend distribution surcharge and property income tax;

② Payroll tax;

③Nothing in this agreement shall hinder the collection of minimum taxes;

(2) In China:

①Individual income tax;

②Corporate income tax;

(3) This agreement also applies to the same or substantially similar taxes that are newly added or replace the existing taxes that are levied after the date of signing this agreement. The competent authorities of the Contracting States shall notify each other of important changes in their respective tax laws.3. Permanent establishment

3.1 Definition of permanent establishment

In this agreement, the term "permanent establishment" refers to a fixed place of business where an enterprise conducts all or part of its business.

3.2 The term "permanent establishment" specifically includes:

(1) Management place;

(2) Branches;

(3) Office;

(4) Factory;

(5) Workplace;

(6) Warehouse;

(7) Mines, oil or gas wells, quarries or other places where natural resources are exploited;

(8) Farm or plantation.

3.3 The term "permanent establishment" also includes:

(1) Construction site, construction, assembly or installation project, or supervision and management activities related thereto, but only if the construction site, project or activity lasts more than 9 months continuously;

(2) The operation of large-scale equipment in the other Contracting State for the purpose of exploration or exploitation of natural resources has been continuously or accumulated for more than 90 days in any 12 months.

3.4 The term "permanent establishment" should be considered as not including:

(1) Facilities used exclusively for the purpose of storing, displaying or delivering goods or commodities of the enterprise;

(2) To keep the inventory of the company’s goods or commodities exclusively for the purpose of storage, display or delivery;

(3) The inventory of goods or commodities of the enterprise is kept exclusively for the purpose of processing by another enterprise;

(4) A fixed business place set up for the purpose of purchasing goods or commodities for the company or collecting information;

(5) A fixed business place specially set up for the purpose of other preparatory or auxiliary activities for the enterprise;

(6) A fixed place of business set up exclusively for the combination of the activities of items (1) to (5) of this paragraph, provided that this combination makes the overall activities of the fixed business place a preparatory or auxiliary nature.

3.5 Other situations

(1) Notwithstanding the provisions of Clauses 3.1 and 3.2, when a person (except for the independent agent applicable to Clause 3.5.2) represents an enterprise of one contracting state to conduct activities in the other contracting state, and: 

①has the right to act in the name of the enterprise To conclude a contract in the other Contracting State and regularly exercise such powers, unless the person’s activities through a fixed place of business are limited to the provisions of Article 3.4, according to the provisions of this paragraph, the fixed place of business shall not be considered to constitute a permanent establishment

②there is no such thing as the above Power, but often keep stocks of goods or commodities in the other contracting state, and often deliver goods or commodities from the stocks on behalf of the enterprise; for any activity carried out by the individual for the enterprise, it shall be deemed that the enterprise is established in the other contracting State There is a permanent establishment. 

(2) An enterprise of a Contracting State only conducts business in the other Contracting State through a broker, general commission agent or any other independent agent that conducts its own business as usual, and shall not be considered to have a permanent establishment in the other Contracting State. 

(3) A resident company of a Contracting State controls or is controlled by a resident company of the other Contracting State or a company conducting business in the other Contracting State (regardless of whether through a permanent establishment). This fact cannot be based on the fact that any company of the other Party constitutes a company of the other Party Permanent establishment.

4. Taxation of different types of income

4.1 Income from real estate

4.1.1 Taxation of income from real property

Income derived by a resident of one Contracting State from immovable property located in the other Contracting State (including income from agriculture and forestry) may be taxed in the other Contracting State. It applies to income derived from direct use, lease or any other form of use of real property. It also applies to the real estate income of the enterprise and the real estate income used to perform independent personal services.

4.1.2 Definition of real estate

The term "immovable property" shall have the meaning provided by the law of the Contracting State where the property is located. The term shall in any case include property attached to immovable property, livestock and equipment used in agriculture and forestry, rights applicable to the general laws and regulations of real estate, usufructuary rights of immovable property, and the right to mine mineral deposits, water sources, and water resources due to mining or the right to mine. The right to irregular or fixed income from other natural resources. Ships and aircraft should not be regarded as real property. 4.2 Corporate Profit

4.2.1 Taxation of corporate profits

The profits of an enterprise in a Contracting State shall be taxed only in that Contracting State, unless the enterprise conducts business in the other Contracting State through a permanent establishment located in the other Contracting State. If the enterprise conducts business in the other contracting state through a permanent establishment located in the other contracting state, its profits may be taxed in the other contracting state, but only the profits attributable to the permanent establishment shall be limited.

4.2.2 Profits belonging to a permanent establishment

If an enterprise of a Contracting State conducts business in the other Contracting State through a permanent establishment located in the other Contracting State, the permanent establishment shall be deemed to be an independent separate enterprise engaged in the same or similar activities under the same or similar circumstances, and shall belong to the same permanent establishment. The enterprise is completely independent, and the profits that the permanent establishment may obtain shall belong to the permanent establishment in each of the contracting states. When determining the profits of a permanent establishment, it shall be allowed to deduct various expenses incurred in its business operations, including administrative and general management expenses, regardless of whether they occur in the country where the permanent establishment is located or anywhere else. Unless there are appropriate and sufficient reasons for changes, the same method should be used to determine the profits attributable to a permanent establishment every year. If the profit includes the income items separately stipulated in the other articles of this agreement, the provisions of this article shall not affect the provisions of the other articles.

4.3 Sea and air transportation

The profits made by an enterprise of a Contracting State that use aircraft to operate international transportation services shall be taxed only in that Contracting State. The income obtained by an enterprise of one of the Contracting States from the other Contracting State using ships to operate international transportation business or the use of ships to engage in inland water transport may be taxed in the other Contracting State, but the tax levied by the other Contracting State shall be reduced to 50%. The provisions of this Article also apply to profits obtained from participating in a partnership, joint operation, or participation in an international operating agency.

4.4 Associated companies

(1) In any of the following cases:

① An enterprise of one Contracting State directly or indirectly participates in the management, control or capital of the enterprise of the other Contracting State;

②The same person directly or indirectly participates in the management, control or capital of an enterprise in one contracting state and an enterprise in the other contracting state. The constitutional conditions of the commercial or financial relationship between the two enterprises are different from the constitutional conditions between independent enterprises, and because of these conditions Existence, causing one of the enterprises to fail to obtain the profit that it should have obtained, then this part of the profit can be included in the income of the enterprise and taxed accordingly.

(2) One of the contracting states shall include the taxed corporate profits of the other contracting party-in the case where the relationship between two enterprises is a relationship between independent enterprises, this part of the profits should have been obtained by the enterprise of the contracting party-included in When tax is levied on the profits of an enterprise of one of the Contracting States, the other Contracting State shall adjust the amount of tax levied on such profits. When determining adjustments, due attention should be paid to other provisions of this Agreement. If necessary, the competent authorities of the Contracting States shall consult each other.

4.5 Dividends

4.5.1 Taxation of dividends

Dividends paid by a resident company of one Contracting State to a resident of the other Contracting State may be taxed in the other Contracting State. However, these dividends can also be taxed in accordance with the laws of the contracting country of which the company paying the dividends is a resident. However, if the beneficial owner of the dividend is a resident of the other Contracting State, the tax collected shall not exceed 10% of the total dividend. This paragraph shall not affect the taxation of the company’s profits before the payment of dividends.

4.5.2 Definition of dividend

The term "dividends" in this article refers to income derived from shares, mining shares, promoter shares, or other non-credit rights to share profits, and according to the laws of the Contracting State in which the company distributing profits is a resident, it is deemed to be taxed the same as share income Other company’s rights.

4.5.3 Other situations

If the beneficial owner of the dividend is a resident of one of the contracting states, the company that pays the dividend is a resident of the other contracting state and conducts business through a permanent establishment located in the other contracting state or performs independent personal services through a fixed base located in the other contracting state. If the dividend-paying shares are actually related to the permanent establishment or fixed base, the provisions of 4.5.1 are not applicable. In this case, the provisions of Article 4.2 or Article 4.10 shall be applied as appropriate.

A resident company of a Contracting State receives profits or income from the other Contracting State. The other Contracting State shall not tax the company’s dividends or undistributed profits of the company, even if the dividends or undistributed profits are paid in whole or in part. It is the profit or income that occurs in the other contracting state. However, dividends paid to a resident of the other contracting state or the shares on which the dividends are paid are not in actual connection with a permanent establishment or fixed base established in the other contracting state.

4.6 Interest

4.6.1 Taxation of interest

Interest paid to a resident of the other contracting state in a contracting state may be taxed in the other contracting state. However, these interests can also be taxed in the Contracting State where they occur, in accordance with the laws of that country. However, if the beneficial owner of the interest is a resident of the other Contracting State, the tax collected shall not exceed 10% of the total interest. Notwithstanding the foregoing provisions, interest paid to the government or local authority, central bank, or financial institution or legal entity of the other contracting state mainly owned by the government of the other contracting state shall be exempt from tax in that contracting state. The term "mainly owned" in this paragraph refers to ownership exceeding 50%.

4.6.2 Definition of interest

The term "interest" in this article refers to the income obtained from various claims, regardless of whether it has a mortgage guarantee or the right to share in the debtor's profits; especially income obtained from public bonds, bonds or debentures, including their premiums and bonuses, And all other tax-related laws of the Contracting State where the income occurs are deemed to be income derived from borrowing. The penalty incurred due to delay in payment shall not be regarded as interest under this Article.

4.6.3 Other situations

(1) If the beneficial owner of the interest is a resident of one of the Contracting States, in the other Contracting State where the interest occurs, conducts business through a permanent establishment in the other Contracting State or performs independent personal services through a fixed base in the other Contracting State, If the creditor's right on which the interest is paid is actually related to the permanent establishment or fixed base, the provisions of 4.6.1 of this Article shall not apply. In this case, the provisions of Article 4.2 or Article 4.10 shall be applied as appropriate.

(2) If the person paying the interest is a resident of a Contracting State, the interest shall be deemed to have occurred in that State. However, if the person paying the interest—whether or not he is a resident of one of the contracting states—has a permanent establishment or a fixed base in the contracting state, the debt on which the interest is paid is connected to the permanent establishment or fixed base, and is borne by it. Interest shall be deemed to have occurred in the Contracting State where the permanent establishment or fixed base is located.

(3) Due to the special relationship between the person paying the interest and the beneficial owner or between them and other people, the amount of interest paid on the relevant creditor's rights exceeds the amount that the payer and the beneficial owner can agree without the above relationship, The provisions of this article shall only apply to the amount that can be agreed in the absence of the above-mentioned relationship. In this case, the excess of the payment shall still be taxed in accordance with the laws of each Contracting State, but due attention shall be paid to other provisions of this Agreement.

4.7 Royalties

4.7.1 Taxation of royalties

Royalties incurred in one contracting state and paid to residents of the other contracting state may be taxed in the other contracting state. However, these royalties can also be taxed in the Contracting State where they are incurred, in accordance with the laws of that country. However, if the beneficial owner of the royalties is a resident of another Contracting State, the tax collected shall not exceed 10% of the total royalties.

4.7.2 Definition of royalties

The term "license fee" in this article refers to the use or right to use the copyright of literary, artistic or scientific works (including film, film, radio or television broadcasting film, tape), any patents, trademarks, designs or models, drawings , Secret formulas or secret procedures, or various payments for information related to industry, commerce, or scientific experience.

4.7.3 Other situations

(1) If the beneficial owner of the royalties is a resident of one of the Contracting States, in the other Contracting State where the royalties are incurred, they conduct business through a permanent establishment located in the other Contracting State or through a fixed establishment located in the other Contracting State. If the base is engaged in independent personal services and the right or property on which the royalties are paid is actually related to the permanent establishment or fixed base, the provisions of Article 4.7.1 shall not apply. In this case, the provisions of Article 4.2 or 4.10 shall be applied according to the specific situation.

(2) If the person paying the royalties is a resident of a Contracting State, the royalties shall be deemed to have occurred in that country. However, if the person paying the royalties-whether or not he is a resident of a Contracting State-has a permanent establishment or a fixed base in the Contracting State, the obligation to pay the royalties is connected to the permanent establishment or the fixed base. , And it shall bear the royalties, it shall be deemed that the said royalties occurred in the Contracting State where the permanent establishment or fixed base is located.

(3) Due to the special relationship between the person paying the royalties and the beneficial owner or between them and other people, the amount of royalties paid for the use, rights or information exceeds that of the payer and the beneficial owner When there is no amount that can be agreed upon in the above-mentioned relationship, the provisions of this Article shall only apply to the amount that can be agreed in the absence of the above-mentioned relationship. In this case, the excess of the payment shall still be taxed in accordance with the laws of each Contracting State, but due attention shall be paid to other provisions of this Agreement.

4.8 Technical service fee

4.8.1 Taxation of technical service fees

Technical service fees incurred in one of the contracting states and paid to residents of the other contracting state may be taxed in the other contracting state. However, technical service fees can also be taxed in the contracting country where they are incurred, in accordance with the laws of that country. However, if the beneficial owner of the technical service fee is a resident of the other Contracting State, the tax collected shall not exceed 10% of the total technical service fee.

4.8.2 Definition of technical service fee

The term "technical service fee" refers to any remuneration received for the provision of management, technical or consulting services (including technical services provided by enterprises or other personnel), but does not include the remuneration for labor services applicable to Article 4.10 of this Agreement.

4.8.3 Other situations

(1) If the beneficiary owner of the technical service fee is a resident of one of the contracting states and conducts business through a permanent establishment located in the other contracting state where the technical service fee is incurred, and the technical service fee is actually connected to the permanent establishment, 4.8 does not apply. The provisions of Article 1. In this case, the provisions of Article 4.2 shall apply.

(2) If the person paying the technical service fee is a resident of a Contracting State and the technical service is performed in that country, the technical service fee shall be deemed to have occurred in that country. However, if the person who pays the technical service fee, regardless of whether he is a resident of a Contracting State, has a permanent establishment or a fixed base in the Contracting State, the obligation to pay the technical service fee is connected with the permanent establishment or fixed base, and is determined by him. To bear the technical service fee, the above-mentioned technical service fee shall be deemed to have occurred in the Contracting State where the permanent establishment or fixed base is located.

(3) Due to the special relationship between the person paying the technical service fee and the beneficial owner or between them and other people, the amount of the technical service fee paid for any reason exceeds what the payer and the beneficial owner can agree with without the above-mentioned relationship In the case of the amount, the provisions of this article shall only apply to the amount that can be agreed without the above-mentioned relationship. In this case, the excess of the payment shall still be taxed in accordance with the laws of each Contracting State, but due attention shall be paid to other provisions of this Agreement.

4.9 Property income

Proceeds from the transfer of real property in the other contracting state by a resident of one of the contracting states mentioned in Article 4.1 may be taxed in that other contracting state. Transfer of movable property that is part of the business property of a permanent establishment of an enterprise of a contracting state in the other contracting state, or income derived from a fixed base of movable property of a resident of a contracting state performing independent personal services in the other contracting state, including the transfer of a permanent establishment (alone or with the entire enterprise) The income from a fixed base may be taxed in the other party of the Contracting State.

The proceeds from the transfer of a ship or aircraft engaged in international transportation by an enterprise of a Contracting State, or the transfer of movable property related to the operation of the aforementioned ship or aircraft, shall be taxed only in that Contracting State. If more than 50% (exclusive) of the value of the shares derived from the transfer of shares by a resident of a Contracting State is directly or indirectly derived from real estate located in the other Contracting State, it may be taxed in that Contracting State. The gains from the transfer of property other than those mentioned in the above four situations shall be taxed only in the Contracting State in which the transferor is a resident.

4.10 Independent personal services

4.10.1 Taxation of independent personal services

Except for the application of Article 4.8, income derived by a resident of a Contracting State due to professional services or other independent activities shall be taxed only in that Contracting State. However, tax may be levied in the other Contracting State under one of the following circumstances:

(1) The other party of the Contracting State shall have a fixed base frequently used for the above-mentioned activities. In this case, the other Contracting State may only tax the income attributable to the fixed base;

(2) Stay in the other Contracting State for a continuous or cumulative total of 183 days or more within any 12 months from the beginning or end of the relevant tax year. In this case, the other contracting party may only tax the income derived from activities in that country.

4.10.2 Definition of professional services The term "professional services" especially includes independent scientific, literary, artistic, educational or teaching activities, as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

4.11 Dependent personal services

Except for the application of the provisions of Articles 4.12, 4.14 and 4.15, salaries, wages and other similar remunerations received by a resident of a Contracting State for employment shall be collected only in that Contracting State except for the activities of employment in the other Contracting State. tax. Remuneration for employment in the other contracting country may be taxed in that other country.

Notwithstanding the above-mentioned provisions, the remuneration received by a resident of a contracting state for engaging in employment activities in the other contracting state meets the following three conditions shall be taxed only in that contracting state:

(1) The payee stays in the other Contracting State for a continuous or cumulative period of no more than 183 days during any 12 months from the beginning or end of the relevant tax year;

(2) The remuneration is paid by or on behalf of an employer who is not a resident of the other Contracting State;

(3) The remuneration is not borne by the employer's permanent establishment or fixed base in the other Contracting State. Notwithstanding the above-mentioned provisions of this Article, remuneration obtained from employment activities on a ship or aircraft operated by an enterprise of a Contracting State for international transportation may be taxed in that Contracting State. 4.12 Directors’ fees and remuneration for senior management. Directors’ fees and other similar payments received by a resident of a Contracting State as a member of the board of directors of a company resident in the other Contracting State may be taxed in the other Contracting State. Salaries, wages and other similar remunerations received by a resident of one of the Contracting States as senior managers of a company resident in the other Contracting State may be taxed in the other Contracting State. 4.13 Artists and athletes

Despite the provisions of Articles 4.10 and 4.11, a resident of a Contracting State as performers, such as drama, film, radio or television artists or musicians, or as athletes, may obtain income from personal activities in the other Contracting State. One party levies taxes. Despite the provisions of Article 4.10 and Article 4.11, the income obtained by the performer or athlete from engaging in personal activities does not belong to the performer or athlete himself, but to other persons. Such income may be in the contracting state where the performer or athlete engages in their activities. tax. Notwithstanding the foregoing provisions, the income derived from the activities mentioned in the first paragraph in accordance with the cultural agreement or arrangement between the contracting states, if the visit to the country is wholly or mainly sponsored by the funds of any one of the contracting states, its local authorities or public institutions, Taxation shall be exempted in the Contracting State that engages in the above-mentioned activities.

4.14 Pension and social security payments

Except for the application of paragraph (2) of 4.15, pensions and other similar remunerations paid to residents of a Contracting State due to a previous employment relationship shall be taxed only in that Contracting State. Notwithstanding the foregoing provisions, pensions and other similar payments paid by the government or local authority of a Contracting State under the public welfare plan of its social security system shall be taxed only in that Contracting State.

4.15 Government services

① The government of a Contracting State or its local authorities shall levy taxes only in the Contracting State for paying salaries, wages and other similar remunerations other than pensions to individuals providing services to it.

②However, if the service is provided in another contracting country, and the individual providing the service is a resident of that other country, and the resident: a. is a national of the other country; or b. is not solely due to the provision of the service If you become a resident of the other country, the above-mentioned salaries, wages and other similar remunerations shall be taxed only in the other country.

① Pensions or other similar remuneration paid by the government or local authority of a Contracting State to individuals who provide services to the government or authority of that Contracting State shall be taxed only in that Contracting State.

②However, if the individual providing services is a resident of the other contracting state and is a national of the other contracting state, the pension or similar remuneration shall be taxed only in the other contracting state.

(3) The provisions of Articles 4.11, 4.12, 4.13, and 4.14 shall apply to salaries, wages, pensions and other similar remunerations obtained from services provided to undertakings organized by the government of a Contracting State or its local authorities.

4.16 Students and interns

Students, business interns or apprentices who are, or were residents of the other contracting state immediately before going to one of the contracting states, and stay in that contracting state only for the purpose of receiving education or training, and are accepted for the purpose of subsistence, education or training. If the money received comes from a party other than that Contracting State, the Contracting State shall be exempt from taxation for six consecutive years from the date of its arrival.

4.17 Other income

4.17.1 Taxation of other income

All income obtained by a resident of a Contracting State, regardless of where it occurs, shall be taxed only in that Contracting State, where it is not provided for in the foregoing Articles of this Agreement.

4.17.2 Other regulations

For income other than income from immovable property specified in Article 4.1.2, if the recipient of the income is a resident of one of the Contracting States, the business shall be conducted in the other Contracting State through a permanent establishment located in the other Contracting State, or through a fixed base located in the other Contracting State The provisions of Article 4.17.1 shall not apply if the rights or property on which the income is paid for performing independent personal services in the other Contracting State is actually related to the permanent establishment or fixed base. In this case, the provisions of Article 4.2 or 4.10 shall be applied according to the specific circumstances. Notwithstanding the foregoing provisions, income derived by a resident of one Contracting State and arising in the other Contracting State may also be taxed in the other Contracting State if not provided for in the above Articles of this Agreement.

5. Methods to eliminate double taxation

(1) In Cambodia, double taxation is eliminated as follows:

① The income of a Cambodian resident from China, in accordance with the provisions of this agreement, can be credited against the Cambodian tax levied on the resident. However, the amount of credit should not exceed the amount of Cambodian tax calculated in accordance with Cambodian tax laws and regulations on the income.

② If the income obtained from China is a dividend paid by a Chinese resident company to a Cambodian resident, and the Cambodian resident owns no less than 10% of the dividend-paying company’s shares, the credit shall be considered to be paid by the dividend company to China for the income. tax.

(2) In China, in accordance with Chinese laws and regulations, the elimination of double taxation is as follows: ①The amount of tax payable by Chinese residents in Cambodia according to the provisions of this agreement can be credited against the Chinese tax levied on such residents. However, the amount of credit should not exceed the amount of Chinese tax calculated in accordance with Chinese tax laws and regulations on the income. ②If the income obtained from Cambodia is a dividend paid by a Cambodian resident company to a Chinese resident, and the Chinese resident owns no less than 10% of the dividend-paying company’s shares, the credit shall be considered to be paid by the dividend company to Cambodia on the income. tax.

(3) In this article, "tax payable" shall be deemed to include tax deductions or exemptions that should have been paid in accordance with the domestic laws or regulations of a contracting country to promote economic development. This provision is valid for 10 years from the date of entry into force of the agreement, but the competent authorities of the contracting states may extend this period through negotiation.

6. Non-discriminatory treatment

(1) The taxes or related requirements borne by the nationals of one of the Contracting States in the other Contracting State shall not be related to the taxes or related requirements borne or possibly borne by the nationals of the other Contracting State under the same circumstances, especially in the case of the same resident status. The requirements are different or heavier. Notwithstanding the provisions of Article (1), these provisions shall also apply to persons who are not residents of one or both Contracting States.

(2) The tax burden of a permanent establishment of an enterprise of a contracting state in the other contracting state shall not be higher than the tax levied by the other contracting state on a domestic enterprise engaged in the same activity. This provision should not be interpreted as meaning that any personal subsidies, concessions, and exemptions in taxation granted to residents of one of the contracting states due to civil status and family responsibilities must also be granted to residents of the other contracting state.

(3) In addition to applying the provisions of Article 4.4, 4.6 or 4.8, the interest, royalties, technical service fees and other payments paid by an enterprise of one Contracting State to residents of the other Contracting State shall be determined when determining the taxable profit of the enterprise. It shall be deducted under the same circumstances as the payment to a resident of that Contracting State.

(4) The capital of an enterprise of a Contracting State is wholly or partly owned or controlled directly or indirectly by one or more residents of the other Contracting State. The tax or related requirements of the enterprise in that Contracting State shall not be the same as other similar enterprises of that Contracting State. The tax or related requirements that are burdened or may be burdened are different or heavier.

(5) Notwithstanding the provisions of Article (2), the provisions of this Article shall apply to all types of taxes.

7. Mutual agreement procedures

(1) If someone believes that the measures taken by one or both of the contracting states cause or will cause the taxation to be inconsistent with the provisions of this agreement, the case may be submitted to that person without considering the remedies provided by the domestic laws of the contracting states. The competent authority of the Contracting State of the resident, or if the case falls under Article 6(1), may submit it to the competent authority of the Contracting State of which the person is a national. The case must be presented within 3 years from the date of the first notification of taxation measures that do not comply with the provisions of this Agreement.

(2) If the above-mentioned competent authority considers that the comments made are reasonable and cannot be unilaterally and satisfactorily resolved, it shall try to resolve it through mutual consultation with the competent authority of the other Contracting State to avoid taxation that is not in compliance with this Agreement. The implementation of the agreement reached is not restricted by the time limit of the domestic law of the Contracting State.

(3) The competent authorities of the Contracting States shall seek to resolve difficulties or doubts in the interpretation or implementation of this Agreement through mutual negotiation, and may also negotiate the elimination of double taxation issues not specified in this Agreement.

(4) In order to reach an agreement under paragraphs (2) and (3), the competent authorities of both contracting states may communicate directly.

8. Information Exchange

(1) The competent authorities of the Contracting States shall exchange foreseeable information related to the implementation of the provisions of this Agreement, or information related to the domestic laws that implement various taxes levied by the Contracting States or their local authorities, in order to collect taxes and taxes in accordance with these laws. This agreement is not in conflict. Information exchange is not restricted by Articles 1 and 2.

(2) Any information received by a Contracting State under paragraph (1) shall be treated in the same confidential manner as the information obtained under the domestic law of that country, and shall only be notified of the assessment and taxation related to the taxation referred to in paragraph (1). Persons or authorities (including courts and administrative departments) and their supervisory departments involved in expropriation, enforcement, prosecution, or appeal rulings. The above-mentioned persons or authorities should only use the information for the above-mentioned purposes, but may disclose relevant information in public court proceedings or court judgments.

(3) The provisions of subparagraphs (1) and (2) shall not be interpreted as the following obligations of a contracting party: ① To take administrative actions contrary to the laws and administrative practices of the contracting party or the other contracting party Measures; ②Provide information that cannot be obtained in accordance with the laws or normal administrative channels of the contracting party or the other contracting party; ③Provide disclosure of any trade, business, industrial, commercial, or professional secrets or trade process information or disclosure that would violate public policy (public Order) information.

Anti-tax avoidance rules and transfer pricing rules

1. Anti-avoidance rules

1.1 Overview

Currently, there are no specific anti-avoidance rules in Cambodian law. However, the law provides for certain penalties applicable to violations of tax provisions (including tax avoidance). Depending on the severity of the violation of tax provisions, the penalty is an additional tax of 10% to 40%. Tax evasion refers to systematic and repeated violations of tax clauses with the purpose of reducing or eliminating the amount of tax required by the tax clauses. Tax evasion is a serious violation of tax provisions and falls within the scope of the prescribed penalties. Penalties are also used to "impede the enforcement of the law", that is, failure to comply with the requirements of the law, such as failing to keep financial account books or other documents or not issuing invoices during transactions. Obstructing the enforcement of the law is a criminal offence and will be subject to additional taxes and prosecution. For example, tax evasion will be fined between 10 million to 20 million Khmer (approximately 2500 to 5,000 U.S. dollars), or go to jail for one to five years, or be fined at the same time.

1.2 Controlled foreign enterprise rules

There are no specific controlled foreign enterprise rules in Cambodia.

1.3 Thin capitalization

Currently, Cambodia does not have thin capitalization rules. However, interest expenses are subject to specific deduction calculations.

(1) For business needs, the interest expenses of borrowing from a third party are deductible expenses.

(2) Interest on funds and interest paid to the internal funds of the enterprise are non-deductible expenses.

(3) The interest paid to the operator cannot be deducted either.

(4) Limit of interest = 50% net interest after excluding interest income and interest expenses + all interest incurred during the entire tax year.

1.4 Permanent establishment

According to the law, a permanent establishment refers to a fixed place or a resident agent operating in Cambodia, and a non-resident taxpayer conducts business activities in Cambodia in this fixed place or through a resident agent in whole or in part. Permanent establishments also include associations and other institutions used by non-resident taxpayers to engage in business activities in Cambodia. In addition, permanent establishments are subject to corporate profits tax, but only for income derived from Cambodia.

2. Transfer Pricing

Currently, Cambodia does not have transfer pricing rules. However, the tax regulations stipulate that the tax authority has broad powers to redistribute income and expenditures between related parties. Related parties are taxpayers who have 20% or more joint ownership. In order to prevent tax avoidance and tax evasion, the Tax Administration can redefine transactions between related parties. Therefore, transactions between related parties must be conducted at market prices.