On 25 May 2021 the National Accounting Council (“NAC”) issued a reminder notification on obligations to submit 2020 annual financial statements for independent audits and to submit these audited financial statements to the Accounting and Auditing Regulator (“ACAR”). This is in line with the Law on Accounting and Auditing 2016 and Prakas No.563 MEF.Prk dated 10 July 2020 on the Obligation to Submit Financial Statements for Independent Audits (“Prakas 563”).

What entities must submit financial reports for independent audits?

Organizations which fall under items 1 to 4 below must submit annual financial statements for independent audits:

1. Public enterprises;
2. Public accountable entities;
3. Qualified Investment Projects (“QIPs”); and
4. Enterprises that meet two of these three criteria: (1) have over 100 employees; or (2) annual turnover above KHR 4 billion (approximately USD 1 million); or (3) KHR 3 billion (approximately USD 750,000) or more in total assets at the end of the accounting period.

Filing Method and Deadline

Those enterprises whose accounting period ends on 31 December or at any date in the second half of the financial year 2020, must submit their annual financial statements and an independent audit thereof via the E-Filing System to ACAR.

The filing deadline had been set for 15 July 2021 but following the release of Notification No.237 dated 13 July 2021, enterprises now have two more weeks to submit their 2020 Audited Financial Statements with the deadline pushed back until 30 July 2021. This is to allow more time for affected businesses to familiarize themselves with the new E-Filing system.

In order to use the E-Filing system, enterprises must request a Financial Reporting Identification Number (“FIN”). We urge all enterprises to apply for the FIN now as it will take approximately ten working days to secure issuance of the FIN from ACAR.

Penalties

In order to avoid penalties for late or incomplete submissions, affected enterprises that may be unable to meet this deadline must submit a written request, outlining clear and justifiable reasons, to seek postponement of the deadline to ACAR, which at its discretion may approve or decline the request.

Any failure to do so will render affected enterprises categorized as ‘Medium’ or ‘Large’ taxpayers liable to fines from KHR 1.5 million – 2 million (approx. USD 375 – 500). These fines among other penalties are listed in Sub-Decree No.79 ANKr.BK dated 1 June 2020 for violations of the Law on Accounting and Auditing 2016 and various other forms of non-compliance.

Enforcement of the penalties laid out by this Sub-Decree had been postponed for over a year by the Circular on Delays to Interim Penalties dated 11 September 2020 but they will soon take effect, from 11 September 2021 onward. It is therefore highly recommended that affected organizations and businesses make all due preparations in advance of this approaching enforcement date to avoid unnecessary fines and penalties.

Tax services required to be undertaken by a licensed tax agent in Cambodia are provided by Mekong Tax Services Co., Ltd, a member of DFDL and licensed as a Cambodian tax agent under license number – TA201701018.

The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.

Contact

Clint O’Connell

Partner, Cambodia Deputy Managing Director & Head of Cambodia Tax Practice

clint.oconnell@dfdl.com

Vattanakpagna Chhun

Senior Accounting Manager