On 20 March 2026, the Ministry of Economy and Finance issued Instruction No. 003 (“Instruction 003”) introducing a reduction of Value Added Tax (“VAT”) on the imported enterprise and domestic supply enterprise of regular gasoline and diesel fuel. This measure aims to mitigate the impact of rising international oil prices and reduce living costs.
Under this instruction, the VAT rate is reduced from 10% to 4%, with the State absorbing the remaining 6% VAT. This reduction would be effectively starting from 20 March 2026 until further notice from the Royal Government.
Instruction 003 is applied to enterprises engaged in the import and distribution of petroleum products (regular gasoline and diesel).
VAT Application for Domestic Supplies
| Supply Type | Customer Category | Invoice Type | VAT Treatment |
|---|---|---|---|
| Domestic supply of regular gasoline and diesel | Taxpayers under the self-assessment taxpayer | Tax invoice | VAT charged change from 10% to 4%. |
| Domestic supply of regular gasoline and diesel | End-user customers (not registered under the self-assessment taxpayer) | Commercial invoice | Sales price inclusive of 4% VAT |
Input VAT Credit Treatment
| Scenario | VAT Creditability | Conditions |
|---|---|---|
| Import or local purchase of regular gasoline and diesel | Creditable at actual VAT paid (10% or 4%) | Valid customs declarations, tax receipts, tax invoices, and payment documents |
| Import or local purchase of other goods/services, other than regular gasoline and diesel. | Creditable under existing VAT rules | Subject to normal VAT provisions |
Tax Administration & Compliance
| Area | Requirement |
|---|---|
| e-Filing system | GDT to add “Purchase–Sales Journal” for 4% VAT supplies |
| Affected taxpayers | Importers and distributors of petroleum products under self-assessment regime |
DFDL Commentary:
Instruction 003 forms part of a broader package of fiscal and pricing measures implemented by the Royal Government of Cambodia to stabilize domestic fuel prices amid rising global oil costs. The reduction of VAT from 10% to 4%, with the State absorbing the remaining 6%, supports the Government’s regulated retail fuel pricing and complements other measures, including reductions in import duties and specific taxes on fuel products.
From a compliance perspective, fuel importers and distributors should ensure that their VAT invoicing, accounting, and reporting accurately reflect the reduced VAT rate and remain consistent with the prescribed retail prices. As these measures are temporary and subject to change, affected taxpayers should continue to monitor further guidance and announcements from the MEF, Ministry of Commerce, and the GDT.
This Tax Alert is intended for general information purposes only and does not constitute legal or tax advice.
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.
