Remuneration of owners and family

Remuneration of owners and family for Cambodia Tax

Remunerations of owners and family are non-deductible expense for tax on income (profit). Company may pay or reward for owners and person family for some reasons.

If owners and family members are employees, remuneration may be subject to tax on salary or tax on fringe benefit based on nature of expense.

Example 1

Assume that Mr. A is owner of ABC company, and ABC gave Mr.A’s son for personal tour around Cambodia $500.

Required

If Mr.A’s son is not employee of ABC Company, recommend amount $500 for Cambodia Tax Treatment.

Answer

1. Expense for tour to Mr.A’s is accounting expense, but Cambodia tax treated this expense as non-deductible expense for tax on income (profit).
2. Amount of $500 is not subject to tax on salary or tax on fringe benefit because he is not employee of ABC Company.
3. Amount of $500 is not subject to withholding tax on service (15%) because Mr.A’s son does not perform service for ABC company.