A Guide to Taxation in Cambodia

Posted by Written by Ayman Falak Medina Reading Time: 4 minutes

The Law of Taxation is the principal taxation law in Cambodia, and taxpayers must submit and pay their taxes to the General Department of Taxation (GDT) annually and monthly.

Most businesses will be affected by the following taxes:

  • Corporate income tax;
  • Minimum tax;
  • Value-added tax;
  • Withholding tax; and
  • Personal income tax.

Corporate income tax

Cambodia’s standard corporate income tax (CIT) rate is 20 percent, which is implemented through a self-assessment regime.

There are three classes of taxpayers:

  • Small taxpayers;
  • Medium taxpayers; and
  • Large taxpayers.

On January 12, 2021, Cambodia’s Ministry of Economy and Finance issued Prakas 009 on the new Reclassification of Taxpayers under the Self-Assessment Regime. Prakas 009 has been in effect since January 1, 2021. The main aim of Prakas 009 is to determine the criteria for small, medium, and large taxpayers.

Taxpayer Classification Based on Annual Turnover

Taxpayer classification

Criteria

Prakas 025

Prakas 009

Small

  • Annual turnover from 250 million riel (US$61,500) to 700 million (US$172,000);
  • Turnover or expected turnover of more than 60 million riel (US$14,700) for three consecutive months per calendar year; or
  • Participates in the bidding, price consulting, or price surveying in supplying goods and services.
  • Annual turnover from 250 million riel (US$61,400) to 1 billion riel (US$245,000) for agriculture, commercial, or service sectors;
  • Annual turnover from 250 million riel (US$61,500) to 1.6 billion riel (US$393,000) for the industrial sector;
  • Turnover or expected turnover of more than 60 million riel (US$14,700) for three consecutive months per calendar year; or
  • Participates in the bidding, price consulting, or price surveying in supplying goods and services.

Medium

  • Annual turnover from 700 million riel (US$172,000) to 4 billion riel (US$983,000);
  • Businesses incorporated as representative office or as a legal entity;
  • Foreign diplomatic and consular mission, technical agencies of other countries, or international organizations; or
  • Non-government associations, national and sub-national government institutions.
  • Annual turnover from 1 billion riel (US$245,000) to 4 billion riel (US$983,000) for the agriculture sector;
  • Annual turnover from 1 billion riel (US$245,000) to 6 billion riel (US$1.4 million) for the commercial and service sectors;
  • Annual turnover from 1.6 billion riel (US$393,000) to 8 billion riel (US$1.9 million) for the industrial sector;
  • Businesses incorporated as representative office or as a legal entity;
  • Foreign diplomatic and consular mission, technical agencies of other countries, or international organizations; or
  • Non-government associations, national and sub-national government institutions.

 

Large

  • Annual turnover of more than 4 billion riel (US$983,000);
  • The business is registered as a multinational company or foreign branch office; or
  • The business is registered as a Qualified Investment Project (QIP).
  • Annual turnover of more than 4 billion riel (US$983,000) for the agriculture sector;
  • Annual turnover of more than 6 billion riel (US$1.4 million) for the commercial and service sectors;
  • The business is registered as a multinational company or foreign branch office; or
  • The business is registered as a Qualified Investment Project (QIP).

Under Prakas 009, the General Department of Taxation also has the authority to re-determine the classification of a taxpayer based on the value of their assets if the declared turnover does not reflect actual turnover.

Taxpayer Classification Based on Annual Value of Assets

Taxpayer classification

Value of assets

Small

  • Annual assets valued from 200 million riel (US$49,000) to 1 billion riel (US$245,000) for the commercial, service, and agriculture sectors; or
  • Annual assets valued from 200 million riel (US$49,000) to 2 billion riel (US$491,000) for the industrial sector.

Medium

  • Annual assets valued from 1 billion riel (US$245,000) to 2 billion riel (US$491,000) for the commercial, service, and agriculture sectors; or
  • Annual assets valued from 2 billion riel (US$491,000) to 4 billion riel (US$983,000) for the industrial sector.

Large

  •  Annual assets valued at over 2 billion riel (US$491,000) for the commercial, service, and agriculture sectors; or
  •  Annual assets valued at over 4 billion riel (US$983,000) for the industrial sector.

Business entities engaged in oil and natural gas production and the exploitation of natural resources will be subject to a 30 percent CIT rate. Entities engaging in Qualified Investment Projects (QIP) will generally pay a zero percent rate.

Minimum tax

The minimum tax is imposed on taxpayers who maintain improper accounting records. The minimum tax due is equal to one percent of total turnover, except value-added tax (VAT), irrespective of whether the taxpayer is in a profit or loss situation.

Value-added tax

VAT is levied on goods and services as well as the sales of fixed assets. The standard rate is 10 percent although some businesses are eligible for zero percent VAT if they engage in activities that support exporters. These include the garment, textile, and footwear industries.

Withholding tax

Withholding tax applies to both resident and non-resident companies in Cambodia. There is no withholding tax on dividends paid to resident companies, whereas non-residents will pay a 14 percent rate. The tax rate on interest, royalties, and fees for technical services is 15 percent for resident companies and 14 percent for non-resident companies.

Nature of income

Tax rate (%)

Residents

Non-residents

Dividends

0

14 + Advance tax on dividend distributions (ATDD)

Interest

15

14

Royalties

15

14

Fees for technical services

15

14

Personal income tax

Cambodia does not impose personal income tax per se, instead, there is a tax on monthly salaries imposed on individuals who derive income from the country. The term salary also includes, in addition to wages, remunerations, bonuses, and other fringe benefits.

Resident employee is taxed on their worldwide sources of income whereas non-residents are taxed on Cambodia-sourced income.

An individual is considered a resident in Cambodia if they domicile in the country or are in Cambodia for more than 182 days in any 12-month period.

New income tax thresholds for 2023

Cambodia has introduced new income tax thresholds for 2023 under Sub-Decree 196. The decree will determine the taxable income earned by physical persons, sole proprietorships, and the distributive share of partners in a partnership, as well as for determining the monthly taxable salaries received by resident employees.

The new thresholds will come into effect from January 1, 2023.

New annual income tax thresholds for physical persons, sole proprietorships, and partnerships

Threshold of income subject to annual tax

Tax rate (%)

0 riel to 18,000,000 riel (US$4,344)

0

18,000,001 riel (US$4,345) to 24,000,000 riel (US$5,739)

5

24,000,001 riel (US$5,795) to 102,000,000 riel (US$24,629)

10

102,000,001 riel (US$24,625) to 150,000,000 riel (US$36,214)

15

Over 150,000,000 riel (US$36,214)

20

New monthly tax thresholds on income for salaries received by resident employees

Threshold of income subject to annual tax

Tax rate (%)

0 riel to 1,500,000 riel (US$361)

0

1,500,001 riel (US$362) to 2,000,000 riel (US$482)

5

2,000,001 riel (US$483) to 8,500,000 riel (US$2,050)

10

8,500,001 riel (US$2,050.74) to 12,500,000 riel (US$3,739)

15

Over 12,500,000 riel (US$3,739)

20

Non-residents are taxed at a flat rate of 20 percent.


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