Legal Updates for September 2020

Strengthening Measures for Enforcement of the Law on Telecommunications

To implement the regulations in the telecommunications sector more effectively, the Telecommunication Regulator of Cambodia ("TRC") issued guideline No. 1606 dated 12 August 2020 on Strengthening Measures for Enforcement of the Law on Telecommunications ("Guideline"). The Guideline requires the telecommunication operators to comply with certain obligations such as timely self-declaration and payment of licence fees (allocated revenue), and contributing certain percentages of their gross annual revenue to prescribed funds.

2021 Minimum Wage for Workers in the Textile, Garment and Footwear Industries

The Ministry of Labour and Vocational Training ("MLVT") issued Prakas No. 303/20 dated 10 September 2020 on the Minimum Wage Determination for Workers in Textile, Garment and Footwear Sectors for 2021 ("Prakas"). According to the Prakas, starting from 1 January 2021, the minimum wage of workers in the textile, garment and footwear industries will be increased to US$192 per month from the current US$190 per month.

RGC Updates on Subsidies for Employees in the Garment and Tourism Sectors during the Employment Suspension

To update the amounts of subsidy provided by the Royal Government of Cambodia (“RGC”) to employees in the garment and tourism sectors, the Ministry of Labour and Vocational Training has issued several notifications as follows:

  • three notifications on 24 July 2020;
  •  two notifications on 29 July 2020;
  •  three notifications on 31 July 2020;
  •  two notification on 26 August 2020;
  •  one notification on 2 September 2020, and
  •  one notification on 10 September 2020.

Generally, the amount of subsidy varies with the period of employment suspension, and subject to fulfilment of certain conditions such as employees who have completed soft skills training.

TRC Issues Guidelines Requiring Telecommunication Operators to Seek Approval Prior to Certain Activities

Pursuant to Article 22 and Article 63 of the Law on Telecommunications, the Telecommunication Regulator of Cambodia ("TRC") issued guideline No. 1252 dated 30 June 2020 instructing all telecommunication operators to seek TRC's approval prior to undertaking any activity related to mergers and acquisitions, pledging rights conferred by TRC (for instance under the permit, certificate, or licence) as security, and composition change of their management teams. 

Clarification on Compensation in Cases of Termination of Undetermined Duration Contract

On 14 August 2020, the Ministry of Labour and Vocational Training ("MLVT") issued a clarification on the compensation in lieu of prior notice and damages in cases of termination of undetermined duration contract ("UDC"), providing additional explanation to Letter No. 295 dated 29 July 2020 of the Inspection Department of the MLVT on clarification of "damages" and “compensation in lieu of prior notice”.

Employing Foreign Employees Beyond the Permitted Quota

The Ministry of Labour and Vocational Training ("MLVT") has issued Prakas No. 277/20 dated 14 August 2020 on Employing Foreign Employees Under Special Condition ("Prakas") relating to allowance to employ foreign employees beyond the "10% permitted quota" that employers/enterprises can employ. Under normal circumstances, any enterprise may only employ foreign employees up to a maximum number that is equivalent to 10% of the total number of Cambodian employees in that enterprise ("10% permitted quota").

Strengthening Business Registration Requirements and Trademark Protection for Media Operators

The Ministry of Commerce (“MOC”) and the Ministry of Information (“MOINFO”) have jointly issued an inter-ministerial Prakas No. 0256 MOC.BR.PrK dated 28 August 2020 on the Management of Business Registration, Protection of Trademark and Tradename for Information and Audio-visual Licenses (“Joint Prakas”).

The Joint Prakas applies to all natural and legal persons that are engaged in providing information and audio-visual-related services in Cambodia. It aims to regulate information and audio-visual operators (“media operators”) in terms of compliance with business registration requirement and use of trademarks.

Sub-Decree 134 Implementing the Law on E-Commerce

Almost ten months after the adoption of the Law on E-Commerce in November 2019, the Royal Government of Cambodia issued on 27 August 2020 Sub-Decree No. 134 on Determination of Type, Formality and Procedure of the Issuance of Permit or Licence for Intermediaries and Online Services Providers via Electronic Platform and Its Exception (“Sub-Decree 134”). Sub-Decree 134 came into operation on 27 August 2020.

Sub-Decree 134 applies to natural persons, sole proprietorships, legal entities and branches of foreign companies that are engaged in business activities via the electronic platform in Cambodia.

National Consumer Protection Committee Established to Promote Consumer Protection and Good Faith Dealings in Commercial Transactions

The National Consumer Protection Committee (“NCPC”) was established pursuant to the Law on Consumer Protection which was promulgated in November 2019. On 27 August 2020, ten months following the adoption of the Law on Consumer Protection, the Royal Government of Cambodia (“RGC”) issued Sub-Decree No. 135 on the Organization and Functioning of the National Consumer Protection Committee (“Sub-Decree 135”).

Sub-Decree 135 aims to promote the effective implementation of the Law on Consumer Protection and encourage good faith dealings in commercial transactions.

This Update highlights the key features of Sub-Decree 135:

  • Composition of NCPC
  • Duties of NCPC
  • Meetings and Decision Making
  • Financial Sources
Prakas No.346 to Impose Capital Gains Tax on Resident and Non-Resident Taxpayers to Take Effect on 1 January 2021

The Ministry of Economy and Finance (“MEF”) has issued Prakas No.346 on Capital Gains Tax (“CGT”) dated 1 April 2020 (“Prakas”). The Prakas was intended to be effective from 1 July 2020. However, the Director General of the General Department of Taxation (“GDT”) has verbally announced that the implementation of this Prakas will be delayed to 1 January 2021.

The purpose of this Prakas is to impose tax on capital gains realised by both resident and non-resident taxpayers. Article 4 of the Prakas explicitly defines a resident taxpayer as being limited to a natural person resident taxpayer whereas a non-resident taxpayer includes both a natural person and a legal entity non-resident taxpayer.

This Update highlights the key features of this Prakas:

  • Definitions of "capital asset" and "capital gains";
  • Methods of calculating capital gains for the purpose of determining CGT;
  • Consequences of failure to pay CGT; 
  • Exempt transactions; and 
  • CGT with respect to capital gains realised from overseas assets