Instruction No. 37705 & 37706

This Instruction reinforces compliance with the accrual accounting basis prescribed under Article 6 of the Law on Taxation, Article 43(1) and Article 59(1) of the Prakas on Tax on Income, and Cambodian International Financial Reporting Standards (“CIFRS”) requirements.A key emphasis is that any transaction subject to withholding tax (“WHT”) that has been or must be recorded as an accrual is deemed as paid for WHT purposes, even if payment has not yet occurred.

Key Highlights

·       Accrual basis compliance: Taxpayers must apply CIFRS and record transactions in the period they occur, regardless of payment status. Accrued expenses must be recorded in the purchase journal by referencing the related accrual voucher.

·       Withholding tax (“WHT”): Accrued expenses subject to WHT must be declared and paid monthly. Overpaid WHT can be offset in future months; underpaid WHT must be settled.

·       Prepayment of income tax (“PIT”): Accrued income is subject to monthly PIT.

·       Value added tax (“VAT”): No input VAT credit may be claimed on accrued expenses until the actual tax invoice is received from a VAT-registered supplier.

·       Adjustments for discrepancies: Differences between accrued and actual amounts require offset or additional payment.

·       Voucher requirements: Taxpayers must record accrued income or expenses using a formal voucher containing at least:

-        Voucher title

-        Voucher number and date

-        Account code and sub-account code

-        Debit and credit amounts

-        Description

-        Preparer’s name, signature, and date

-        Approver’s name, signature, and date

·       Penalties: Accrued amounts must be estimated based on historical data, comparable transactions, or proportional allocation. Misstatement or fraudulent accruals to reduce tax base are subject to penalties under Articles 225, 235, and 243 of the Law on Taxation.

Instruction No.37706 

New Function for Tax Declaring Accruals in E-Filing System

On 2 December 2025, The General Department of Taxation (“GDT”) has issued Instruction No. 37706 on the Procedures for Tax Declaration of Transactions Incurred and Recorded in Accounting Prior to Payment in the Online Business Tax Filing System (e-Filing).
 
This initiative aligns with the modernization of GDT’s IT system and aims to facilitate compliance with accrual-based accounting under Cambodian International Financial Reporting Standards (“CIFRS”).

Key Highlights

·       New functionality: Taxpayers can now declare income and expense transactions incurred before payment, as well as transactions based on actual invoices, through the e-Filing system.

·       Accrual accounting requirement: Taxpayers must record transactions in sequence as they occur, regardless of payment status. For withholding tax purposes, expenses must be recorded monthly based on economic activities, and deemed paid once recorded.

·       Procedures

1.      Login to e-filing: Use existing credentials and follow standard monthly filing steps.

2.     Access functions:

-        List of Purchase and Sale Journal

-        List of Withholding Tax

-        Click “Add New” and select relevant options.

3.     Record transactions:

-        Tick “"” for accrued expense or income boxes for transactions incurred prior to payment.

-        Enter required details and save.

4.     Offset with actual invoices:

-        Tick “"” If  you possess an accrual voucheran accrual voucher exists.

-        Use “Add Accrual Voucher” to link actual invoices with previously declared accruals.

5.     Complete monthly tax return: Continue as per existing monthly filing procedures.

For more details and assistance in reviewing your tax obligations under this instruction, please contact us.