On 7th June 2022, the General Department of Taxation (GDT) issues Instruction No. 12093 on the Guidelines On The Implementation of Value Added Tax (VAT) on Long-Term Tangible Assets as follow:
1. Regardless of whether the Tax input credit has been claimed or not, when the long-term tangible assets that are no longer used in the business are sold, whether in the form of usable or disposable assets, they must be subject to 10% VAT.
2. Long-term assets that are no longer used in business, then destroyed or damaged for any reason or unvaluable, are not subject to 10 % VAT. However, the enterprise must provide clear proof to testify that. The enterprise must notify the GDT within ten working days before destroying the long-term assets that have a value of 200,000 Riels or more for each asset. The GDT will send a tax officer to inspect at most ten working days after receiving this notification letter.
3. Long-term tangible assets that receive Tax input credit as stated in article 65 of the Law on Taxation and have already been put into use and then ceased to be used for charitable donations as stated in article 16 of the Law on Taxation shall not be considered as sale which is subject to VAT and income tax in the following cases:
– For the second class of tangible assets that have been used for more than 3 years and the remaining value is not more than 1 000 000 Riels for each asset
– For the third and fourth class of tangible assets that have been used for more than 5 years and the remaining value is not more than 2 000 000 Riels for each asset
– For first-class tangible assets that have just been completed or acquired, which have received a Tax input credit and have not yet been put into use, are not considered as sale which is subject to VAT. In case the first class tangible asset is put into use in the business and then ceased to be used for more than one year, the enterprise must notify the GDT, stating the appropriate reason for the termination of the asset to be exempt from the 10% VAT obligation.
5. The term “Long-term assets that are no longer used” refers to any tangible asset that an enterprise retains and no longer used to contribute to the output of the business for a period of one year or more.
This Instruction is issued to supplement Instruction 15301 dated 22 June 2022 on the Implementation of Value Added Tax on Long-Term Tangible Assets.