A year and a half after the law was introduced, the General Department of Taxation yesterday called on all corporations to abide by the Transfer Pricing Law.
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Following the Transfer Pricing Law will facilitate the process of filing tax returns, Traing Lay, director of GDT’s advanced pricing arrangement and transfer pricing bureau, said during a seminar on transfer pricing held yesterday.
Transfer pricing is described as the price at which divisions of a company transact with each other, whether it is the trade of supplies, labour, or any other commodity.
Yesterday’s seminar aimed to introduce the key concepts behind transfer pricing. It addressed how transfer pricing has been implemented in Cambodia and what to expect in the future, identified key transfer pricing risks for businesses, and sought to help companies develop an action plan to ensure compliance.
In Cambodia, the Transfer Pricing Law was introduced in 2017 to combat perceived abuses by companies that lead to loss in tax revenue for the country.
However, 18 months after the law was promulgated, few companies have submitted transfer pricing declarations to the nation’s tax body and general awareness of the concept remains low, according to Mr Lay.
Cambodia has been relatively slow in tackling transfer pricing and is now seeking to catch up with its Asian neighbours in terms of regulation and auditing, he said.
To combat the lack of understanding on the issue, GDT is conducting seminars and workshops to educate the private sector and the public, with several awareness-raising events plan for the near future, said Mr Lay.
Say Sokheng, Partner and Head of Regional Accounting Advisory Practics, explained the problem in a Cambodian context.
As per the regulation, Cambodian enterprises that have transactions with related parties must file an annual transfer pricing declaration, which must be submitted together with the annual declaration on tax on income and other transfer pricing documentation requested by GDT.
Failure to comply with these requirements may lead to penalty, an adjustment of the applicable tax or a lawsuit, the law states.