Transfer pricing is new for Cambodia. 10 October 2017, Ministry of Economy and Finance issued Prakas 986 in order to combat perceived transfer pricing abuses.
Objective of the Prakas, as per Prakas, is to determine pricing level between related party’s transactions.
Related party, as per Prakas, refer to:
- Member of the same immediate family
- An enterprise or individual who control or be controlled by taxpayer or who is jointly controlled by the same taxpayer. Control here refers to having of 20% of share capital or equivalent to voting right in the taxpayer’s Board of Director.
Five methodologies endorsed by the Prakas are in line with those set out by the Organization for Economic Co-operation and Development (“OECD”).
- Comparable uncontrolled price – CUP
- Resale Price Method – RPM
- Cost plus Method – CPM
- Transaction Net Margin Method – TNMN
- Profit Split Method – PSM
Each method has been elaborating in the Prakas as well.