The National Bank of Cambodia (“NBC”) has issued a Prakas on Management of Payment Transactions Services Institution dated 14th June 2017. The Prakas is made to determine the procedure for licensing Payment Transactions Services providers, to encourage fair competition and innovation and to gain public trust.
The Prakas governs both Payment Transactions Services providers and Banks. However, services such as information technology support, data storage and processor, payment transactions using bank’s location and so on are excluded from the Prakas’s purview.
Unlike Third Party Processor, which is a service provider or processor to facilitate bank’s payment transactions services and operations, Payment Transactions Services provider is independent. The Prakas has stipulated the scope of business of Payment Transactions Services provider in Article 6 and 7 that it can engage in businesses such as deposit and withdrawal in payment account service, money transfer service, payment transaction service, providing short term credit, issuing electronic currency, money changer and so on. However, money that Payment Transaction Services providers have received from payment transaction and issuing e-currency is not deemed to be deposit.
To operate as Payment Transactions Services provider, legal entities must obtain license from the NBC. Legal entities need to fulfill numbers of conditions to obtain license from NBC. For example, legal entities need to describe the type of payment transaction service that it will operate, business plan, evidences of capital sufficiency and so on. On top of that, the Prakas requires the legal entities to have minimum capital of 8,000 million Riel (around USD2 million) in cash and 5% of the minimum capital must be deposited with NBC. Nevertheless, the license to operate as Payment Transactions Services provider is valid in six years but it is renewable.
With regard to fee, legal entities need to pay 500,000 Riel (around USD125) for application form plus inquiry and 2,000,000 Riel (around USD500) for having the documents reviewed. Also, legal entities are required to pay annual fee of 20,000,000 Riel (around USD5000).
The Prakas also states about merger and acquisition in Article 24 that Payment Transactions Services providers must gain approval from NBC if it intends to merge with other institutions, transfer or be acquired in part or whole of its business or cease its business operation. Besides, NBC has right to delicense or suspend any Payment Transactions Services providers’ operation that fail to operate within six months, engage in fraud or forgery, be non-compliance with NBC’s supervision and so on.
Ministry of Economic and Finance (MEF) has issued the Prakas No. 559 dated May 25, 2017 on the instruction of the implementation for VAT on non-taxable supplies in accordance with the Article 57 of the Law on Taxation amended by the Law on Financial Management 2017. This Prakas aims to clarify the goods and services those are non-taxable supplies in order to ensure the consistency of VAT implementation.
The Prakas applies to the self-assessment taxpayers in making non-taxable supplies below:
1. Public postal service
2. Hospitals, clinics, medical and dental services, and the sale of medical and dental goods incidental to the performance of such services
3. The services of transportation of passengers by a wholly state owned public transportation system
4. Insurance services
5. Primary financial services
6. The importation of materials for personal use those are exempt from customs duties in accordance with the customs provisions
7. Non-profit activities for serving the public interest
8. Educational service
9. Electric power and clean water
10. Unprocessed agricultural products
11. Solid and liquid waste removal or collection services
The Prakas specifically defined the term of “primary financial services” and includes certain kind of transactions and services which fall under the term as follow:
- The deposition operations and granting loans except fees relating to such granting loans.
- The initial securities public offering in the market, securities trade or other financial instruments, and the clearing and settlement services in the securities market.
- Money Exchange Service
- Security Service
- Trading of Unshaped Gold
NOTE: There was a significant event that the public misunderstand and misinterpreted that this Prakas was issued to impose VAT on above 11 goods and services supplies. Regardless, the Prakas was issued to clarify that the aforementioned goods and services supplies are exempted from VAT and they are called “non-taxable goods and services supplies”.
On May 22, 2017, National Bank of Cambodia (“NBC”) issued an Instruction No. T7.017.420 SJN in purpose to make a caution to all Bank, Financial Institution, and Credit Operator for stop accepting the Identity Card or Family Book or Resident Book as collateral. Last year, on March 11, NBC already issued an Instruction No. T7.016.210 SJN for informing those institutions after NBC observed and found that the Identity Card or Family Book or Resident Book was accepted and taken as collateral to secure the loan in some Bank, Financial Institution, and Credit Operator.
Since now, NBC has acknowledged that several Banks, Financial Institutions, and Credit Operators are still accepting the Identity Card or Family Book or Resident Book in securing and release loan. This action is illegal under the Code of Civil and other regulation in force. Under Instruction No. T7.016.210 SJN, NBC has explained that the Identity Card or Family Book or Resident Book has no any economy value to be the collateral. Those documents are just the legal documents issuing by competent authority to identify a person and population statistic. NBC already warned that if any banks, financial institutions and credit operators fail to comply with laws and regulations in force, that institution shall be punished under the Law on Banking and Financial Institution.
Under the Instruction No. T7.017.420 SJN on May 22, 2017, NBC wants to instruct those Banking and Financial Institution to get more attention for complying with Instruction on March 11, 2016 and Law on Banking and Financial Institution effectively. In its letter mentioned that if any banks, financial institutions and credit operators fail to comply, they would face with penalties such as withdrawal the licenses or the Registration Permit or stop the business activity in accordance with Article 52 and Article 56 of Law on Banking and Financial Institution.
It comes to a big surprise for financial analysts and all microfinance institution (MIFs) themselves after National Bank of Cambodia (NBC) issued a Prakas to order all MFIs under its supervision impose no more than 18% interest rate to all kinds of loan from 1st April this year.
The Prakas is known as Prakas No. B7.017.109.P.K on Annual Interest Rate Ceiling Limitation issued on 13th March 2017. This Prakas aims to help reducing poverty by curbing any higher interest rates for Borrowers.
In Article 5 of the Prakas has specified that all New Loans including Restructured Loans and Refinancing which is signed from this 1st April 2017 shall apply the new rule of Annual Interest Rate Ceiling Limitation. The Prakas is expected to be complied otherwise shall be subjected to the penalties as stipulated in Article 52 of Law on Banking and Financial Institutions.
On December 1, The National Bank of Cambodia “NBC” issued a Prakas requiring all Micro-Finance Institutes (MFIs) to adopt measures to promote the usage of the national currency – Riel. The implementation of this Prakas shall extend for three years. Cambodian microfinance institutions are willing to comply with the new regulation which requires them to hold at least 10 percent of their loan portfolio in the currency of the Kingdom of Cambodia.
On July 07, 2017, Ministry of Commerce has issued a Prakas No: 172 MOC/PK to modify the Prakas No: 047 MOC/SM dated January 23, 2013 concerning the price tag in Riels currency. This new Prakas was issued to impose all Traders, Venders, and Service Providers in Cambodia to put the price tag in Riels currency on their selling products and services. The Prakas is purposed to promote the transparency of the national currency over the goods, product, and service charged in Cambodia.
However, some business area, called “Duty Free”, which are licensed by the Government to have price tag in foreign currency, they are required to have an approval from Municipal or Provincial Department of Commerce of the place of business. The approval is valid for one year and it is subject to be renewable. The approval shall be submitted with the required documents where consist of Application Form, Certificate of Incorporation, latest Patent Certificate, ID Card or Passport, and three of 4 X 6 photos. All Duty Free Shops who held an approval to have price tags in foreign currency has duty to pay the public free as stipulated in Public Official Fee of Ministry of Commerce.
Ministry of Commerce has issued a new Prakas No. 107 MOC/SM on “Filing of Annual Declaration of Commercial Enterprise” on 05th April, 2017 and at the same time nulled Prakas No. 104 MOC/SM dated on 07th April, 2008.
Since the registration system has been available to conduct online, filing annual declaration of Commercial Enterprise is too available and required to file online. All commercial enterprises will be sent a notice to file their annual declaration in the eleventh month and are required to start filing them including other references in the twelfth month counted from the date of their commercial registrations through online system. The duration for filing is provided for three months following from the beginning date of the abovementioned twelfth month
In case any commercial enterprise fail to comply with this prakas to file the annual declaration, they will be imposed under penalties set force in the laws and this Prakas. The sole Prakas will penalize 1 Million Riels for such failure.
The Prakas has indicated some particular information to be filled in the online system for all commercial enterprise including Taxpayer Identification Number (TIN), Tax Registration Date, Patent Certificate in the year of filing the annual declaration, number of employees including referenced documents specified on their duties, currently used phone numbers and email addresses of the company. It is, however, important to note that except Public Limited Company is required to submit other additional informations to the above listed which include financial statement and the company’s owner record.
On March 20th, Securities and Exchange Commission of Cambodia (SECC) issued an announcement to inform the public that SECC temporally stop accepting application for licensing a New Central Counterparty License to Derivatives Trading Firms. Notwithstanding, SECC still encourage persons who want to be a Derivative Brokerage firm and unlicensed Derivative Brokerage firm promptly apply the application. Those who are unlicensed Derivative Brokerage firms failed to get the license from SECC are warned to faced legal action.
For the public information, SECC listed the current four licensed Central Counterparty companies and six licensed Brokerage.
In the same announcement, SECC added that it will carry on accepting the application for licensing a New Central Counterparty License to Derivatives Trading Firms in the future with the date will be specified in another announcement.
On 22nd January 2017, General Department of Taxation announced (GDT) for a “Tax Amnesty” for the registered taxpayers who failed to pay and those who failed to declare the tax up to three years from the filing date. The amnesty, however, will only exempt the tax penalty for the aforementioned failings. Since the penalties are imposed in series as from 10, 25 or 40 percent which is quite significant, the amnesty tend to encourage the taxpayers to pay theirs owed tax by exempting such penalties. This exception will only officially announce and enter into force by GDT this early April.
In addition to the penalties exemption, there is another sub-decree signed by Prime Minister Hun Sen and dated early of February 2017 to exempt tax on profit for Small-Medium Enterprises (SMEs). This exemption intends to push up the SMEs to voluntarily and formally register their businesses tax in GDT as the condition to be exempted. The period of tax on profit exemption will last for “Two Years” till the end of 2018.
Despite there are some incentive tax policies, it is important to note that the “Tax Code Amendment” through 2017 law on financial management appeared to strengthen the tax system. The amendment was seen to provide a clearer authority for “GDT Auditors” to intensively audit on the distinction between the bank statement and the tax returns. The empowerment of such authority is to prevent taxpayer avoiding on provide a full information. GDT authorities now have power to directly request to the bank to provide the bank statement of the taxpayer being audited.
No. 1112 TRC
Guideline on Measure to Eliminate Mobile Phone Sim Cards without Identification Document,
Contradicted to Inter-Ministerial Circular No. 001, dated February 28, 2012
In the high spirited attempt by competent authorities to protect the national security, safety and public order, The Ministry of Interior (“MoI”) and Ministry of Posts and Telecommunications (“MPTC”) have issued the Inter-Ministerial Circular No. 001, dated February 28, 2012 on Telecommunication Services and Business Management which instructed all operators, branches and resellers to implement a protocol which requires all users of telecommunication services to complete a telecommunication services form.