Reducing carbon emissions is a growing priority worldwide. Carbon credits help by allowing companies to offset their emissions through projects that remove greenhouse gases. The experts from ECOVIS VSDK & Partners explore how Cambodia can benefit from carbon credits, especially through biochar production.
We read constantly about net zero and carbon emissions and how to save the planet.
Net zero emissions is when the amount of greenhouse gases (GHGs) released into the atmosphere is equal to the amount removed. Achieving net zero emissions involves both reducing the amount of greenhouse gases released and removing existing emissions from the atmosphere.
Achieving Net Zero Emissions
Reduce emissions: Reduce human-caused emissions from factories and fossil-fueled vehicles.
Remove emissions: Use technologies like direct air capture and storage (DACS) to remove carbon from the atmosphere. Natural approaches include forest restoration.
So how does this affect Cambodia?
An important method of removing emissions from the atmosphere is through the production of a substance called biochar. Biochar is produced by heating biomass, such as wood chips, plant residues, or manure, in a contained system with limited oxygen. This process is called pyrolysis.
According to most estimates, one ton of biochar can sequester approximately 2-3 tons of carbon dioxide (CO2) from the atmosphere, meaning that it effectively removes roughly 2-3 times its weight in CO2 when properly applied to soil.
Carbon credit registries, such as Puro Earth in Finland, have been set up to issue CORCS (C02 Removal Certificates) to approved projects. These CORCS can then be traded to companies wishing to offset their carbon emissions.
For most projects, the process is to apply to the registry with details of the biochar process, and if the company’s process complies with the registry’s guidelines, the project will be accepted. If the company is recognised as an existing or future producer of CORCS, then it is in business as it can usually trade CORCS forward against current investment requirements.
A key element in making biochar is deciding what fuel to burn. Obviously, cutting down trees doesn’t work because it increases greenhouse gas emissions by destroying the tree. However, an important source of biochar fuel is rice husks. When rice is cleaned, about 30% of the biomass is in the husks. This is usually not worth much. But when used as biochar fuel that qualifies for CORCS, it is a game changer. The CORCS become a source of cash and the biochar can also be added to other elements to make excellent soil amendments for farmers.
Equipment required for the biochar process can be sourced from a number of countries, including China. Some equipment manufacturers have already had their equipment certified by registries such as Puro Earth, making the process easier for new projects.
While the biochar process is still relatively new and evolving, it holds significant potential for both environmental and economic benefits in Cambodia.
Projects will need strong support on how to make real financial projections and forecasts. Companies planning to produce biochar need to be able to demonstrate that they will be long-term producers. Business plans must be realistic.
Biochar may become part of a larger ecosystem that helps farmers. Many farms in Cambodia are small, so there is a need for collective organisations to bring together different processing facilities. From biochar production to fertiliser to rice harvesting and processing to international rice sales. There is a lot of money in international organic rice sales, but little of it is seen in Cambodia.
I’m currently working on a project with a company undergoing this transformation, and Cambodia provides the ideal setting. By repurposing a major waste product, we’re not only reducing environmental impact but also creating a valuable revenue stream.
Peru digital services tax and income taxation: Legal controversies and implications
21.03.2025
The Peruvian National Superintendence of Customs and Tax Administration (SUNAT) is interpreting the criteria for determining when services are considered digital very narrowly. This contradicts a Supreme Court ruling. The Ecovis consultants explain the controversy surrounding digital services and the impact of the ruling on taxpayers and tax authorities.
The taxation of digital services has become a critical issue in Peru’s regulatory landscape. The Supreme Court’s ruling in Cassation No. 2705-2024-LIMA clarifies the interpretation of digital services under the Income Tax Law (LIR), contradicting the SUNAT position.
Background: The case of the foreign parent company and its Peruvian subsidiary
A foreign parent company entered into a contract with its Peruvian subsidiary to provide business services. These services did not qualify as digital, as they were not conducted via the internet. Instead, specialised professionals remotely performed intellectual tasks, delivering specific responses to the subsidiary’s various departments without relying on the internet. SUNAT, however, asserted that these services should be considered digital as defined by the regulations of the income tax law. According to SUNAT, it is unnecessary for the service to meet the general requirements set forth in the law to be classified as digital.
The controversy: Do the regulatory provisions supersede the legal requirements?
The core issue is whether the specific list of operations outlined in the regulations of the income tax law is sufficient to classify a service as digital or if such services must also meet the general legal criteria of digital services. The law stipulates that for a service to be considered digital, it must depend on information technology and be essentially automatic by nature. The taxpayer argued that the business services provided by the foreign parent company did not meet these criteria and, therefore, should not be subject to the 30% withholding tax applicable to digital services. SUNAT, on the other hand, maintained that the classification outlined in the regulations was sufficient to consider the service as digital, even if it lacked the essential automation and technological dependency required by law.
We support taxpayers in defending their positions against aggressive tax assessments that lack a solid legal basis. Octavio Salazar Mesias, Partner, ECOVIS Peru, Lima, Peru
The Supreme Court ruling: Cassation No. 2705-2024-LIMA
The Supreme Court sided with the taxpayer, ruling that the list of digital services in the regulations must always be subject to the legal requirements established in the income tax law. Specifically:
A service must depend on information technology: The service must require technology as an intrinsic part of its execution.
The service must be essentially automatic: The process must be executed automatically, with minimal human intervention.
Since the services provided by the foreign parent company were intellectual in nature and performed by professionals without reliance on technology, they did not meet the legal criteria for digital services. Consequently, they were not subject to the 30% withholding tax.
Implications of the ruling
For taxpayers: This ruling provides greater legal certainty for multinational companies operating in Peru. Businesses that receive services from foreign entities should assess whether those services meet the legal definition of digital services before applying withholding tax.
For tax authorities: While this decision clarifies the interpretation of digital services, it does not necessarily change SUNAT’s approach. The tax authority has emphasised in Report No. 000039-2024-SUNAT that digital services are subject to income tax withholding if they are included in the regulations, even if they do not meet the legal criteria of essential automation and technological dependence.
Potential increase in tax litigation: SUNAT’s strict approach to digital service taxation aligns with its ambitious revenue collection targets. However, enforcing tax obligations on services that do not meet the legal definition of digital services may lead to unnecessary litigation, increasing compliance costs for businesses and burdening the judicial system.
Conclusion
The Supreme Court’s ruling in Cassation No. 2705-2024-LIMA reinforces the principle that regulations cannot override the legal requirements set forth in income tax law. While SUNAT continues to assert its broad interpretation of digital services, businesses must carefully analyse their service agreements to determine whether they meet the criteria established by law.
How to register a foreign association in Tunisia: Which obligations must be met
19.03.2025
Foreign associations operating in Tunisia must adhere to a comprehensive set of legal, accounting, tax, and social obligations to ensure compliance and operational efficiency. Failure to comply may result in the suspension of the association’s activities. These requirements are designed to promote transparency, accountability, and good governance. The Ecovis experts know the details.
Legal obligations
To operate legally, foreign associations must:
Register with Tunisian authorities, submitting a declaration to the Secretary General of the Government with details of the parent organisation and objectives.
Publish their establishment in the Official Gazette of the Republic of Tunisia (JORT).
Register with the National Register of Enterprises (RNE) within one month of publication.
Additional legal requirements include:
Compliance with personal data management regulations.
Setting a fixed date for the Annual General Meeting (AGM) to approve financial statements.
Publishing audited financial statements and the auditor’s report in local media. Foreign donations and funds must be reported to the Central Bank of Tunisia (BCT) and the Secretary General of the Government.
We help you meet the legal, accounting, tax and social obligations to ensure effective operations. Khalil Sabbagh, Managing Partner, ECOVIS KDH Partners, Tunis, Tunisia
Accounting obligations
Foreign associations must maintain accurate and up-to-date accounting records in compliance with Tunisian Accounting Standard 45 (NCT 45), which is tailored for non-profit organisations. Key practices include:
Tracking income and expenses by project using an analytical chart of accounts.
Properly accounting for restricted and unrestricted grants, as well as in-kind donations, ensuring alignment with contractual terms.
Maintaining physical and digital accounting records for at least 10 years.
Implementing clear procedures for travel expenses, including mission orders and supporting documentation.
Regular reconciliation of accounting records with declarations (e.g., employer declarations, activity registers).
Tax obligations
Foreign associations must meet several tax-related requirements:
Register with the tax authorities after publication in Tunisia’s Official Journal (JORT).
File monthly returns for withholding tax, VAT, and other applicable taxes.
Submit annual employer declarations and withhold taxes on payments to contractors or temporary staff.
Notify tax authorities of any changes to the association’s statutes or secondary establishments.
Social obligations
Foreign associations must comply with social security regulations:
Register with the National Social Security Fund (CNSS) upon hiring the first employee.
Declare all employees, including temporary staff, and pay social security contributions.
Notify the CNSS of any changes to the association’s address or secondary establishments.
