Example 1-Tax on Salary ( ToS)
Mr. B is Khmer and he has the basic salary of $2,000 per month. For June 2018, he worked extra hours (OT) and got $200. He has two children under 14 year old and wife is housewife.
Residents are taxed at progressive rates as follows:
| Salary Tax Calculation Base Range | Tax Rate | Tax on Salary |
| 0-1,200 ,000 | 0% | 0 |
| 1,200 ,001 -2,000 ,000 | 5% | Salary Tax Calculation Base x 5% – 60,000 |
| 2,000 ,001 -8,500,000 | 10% | Salary Tax Calculation Base x 10% – 160,000 |
| 8,500,001 -12 ,500,000 | 15% | Salary Tax Calculation Base x 15% – 585,000 |
| 12 ,500,001 and over | 20% | Salary Tax Calculation Base x 20% – 1,210,000 |
Assume monthly exchange rates from General Department of Taxation (GDT) as follows:
- Salary rate @ 1 USD = 4,000 KHR
- Average rate @ 1 USD = 4,100 KHR
Required:
- Calculate tax on salary ( KHR amount) for Mr. B
- Make journal entry (accounting record) as USD amount if tax on salary is withheld from Mr.B
Solution
1.Tax on Salary
Salary Tax Base = ($2,000+$200) x 4,000 KHR – 2 x 150,000 KHR – 1 x 150,000 KHR = 8,350,000 KHR
Because 8,350,000 KHR is between 2,000 ,001 -8,500,000, so it is rate @ 10% , so tax on salary = Salary Tax Calculation Base x 10% – 160,000.
Tax on Salary = 8,350,000 KHR x 10% – 160,000 KHR= 675,000 KHR
2.Journal Entry
675,000 KHR/4,000 = 168,75 $
His salary = $2,000 => amount he received 2,031.25 $
Dr. Salary expense……………..2,000$
Cr. Cash………………………………………2,031.25 $
Cr. Salary Tax Payable……………………168.75 $
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