Minimum Tax ( MT)
The Minimum Tax is a separate and distinct tax from the tax on profit(income)/ TOI. This tax is subject to the real regime taxpayers except for the qualified investment project (QIP) recognized by the Council for Development of Cambodia (CDC).
The Minimum Tax is imposed at the rate of 1 percent of the annual turnover inclusive of all taxes except for VAT, and is payable at the time of the annual liquidation of the tax on profit.
The qualified investment project (QIP) is not subject to minimum tax (MT) , but will still be required to pay Prepayment of Tax on Income (PTOI) every month after the conclusion of their TOI deferral period.
A taxpayer will be subject to either tax on income (TOI) or minimum tax (MT) , whichever is greater. MT / TOI is tax liability/payable after deducting Prepayment of Tax on Income (PTOI). PTOI is imposed at 1% of turnover.
New legislation allows for an exemption from minimum tax (MT) for all taxpayers maintaining proper accounting records (but excluding improper accounting records).
Example 1
Assume ABC Company has the following taxes:
-Tax on Income Expense ( Tax on Profit)=$2,000
-Minimum Tax =$1,100
-Prepayment of Profit Tax = $1,000
Calculate yearly tax payable if any
Solution
$2,000 ( Tax on income) > $1,100 ( Minimum Tax), so we will take $2,000 (which one is higher)
So income tax payable = $2,000-$1,000=$1,000
Example 2
Assume ABC Company has the following taxes:
-Tax on Income Expense ( Tax on Profit)=$900
-Minimum Tax =$1,100
-Prepayment of Profit Tax = $1,000
Calculate yearly tax payable if any
Solution
$900 ( Tax on income) < $1,100 ( Minimum Tax), so we will take $1,100 (which one is higher)
So minimum tax payable = $1,100-$1,000=$100