More Incentives, Obligations Announced for Businesses in Cambodia in Tourism, Garment Industries

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  • Cambodia’s Ministry of Tourism (MOT) and the Ministry of Labor and Vocational Training (MLVT), issued new regulations on new tax incentives as well as obligations on suspending employment contracts.
  • The government has extended tax holidays to more cities for businesses in the tourism sector.
  • Companies wishing to suspend employment contracts must first submit an application to the MLVT. If approved, the suspended employees can receive monthly allowances from the government.

On April 17, 2020, Cambodia’s Ministry of Tourism (MOT) and the Ministry of Labor and Vocational Training (MLVT), issued MOT Letter 11 and Instruction No. 045/20, respectively, which provides additional measures to support businesses and employees in the tourism and garment industry.

MOT Letter 11 extends the number of cities in which businesses in the tourism sector can apply for tax exemption, while Instruction No. 045/20 sets out the obligations that businesses must adhere to in order for them to suspend employment contracts. This includes assisting employees in applying for the government monthly allowance.

The country previously issued tax breaks and holidays on February 25, 2020, to counter the economic impact of COVID-19. These incentives mainly covered the industries that are vital to the economy, namely garments and textiles, tourism, and agriculture.

Investors should seek the assistance of dependable advisors to help them understand how they can benefit from these incentives.

Extension of tax payment exemptions

Prior to MOT Letter 11, hotels and guesthouses located in the city of Siem Reap province were exempted from paying tax from February to May 2020.

This has now been extended to include restaurants and travel agents in the cities of Phnom Penh, Siem Reap, Sihanoukville, Kep, Kampot, and Bavet, for three months from March until May 2020. To be eligible, these businesses must be registered with the General Department of Taxation and are still obligated to file their monthly tax returns via the E-VAT system, during the exemption period.

The government has also allowed the related tax payments to be paid in monthly installments through to November 2020.

Suspending employment contracts

Companies in the tourism and garment sectors who want to suspend employment contracts must first submit an application to the MLVT. The maximum period for suspension is two months but this can be extended further depending on the circumstances. More information can be found in the MLVT website.

Employers need to provide the Cambodian ID card and phone number (or a relative’s) of the employees’ subject to contract suspension to the MLVT. Employers should also take the thumbprint next to the employee details. This will allow the MLVT to verify the eligible candidate for the transfer of monthly allowance subsidies.

It is important that the employer tells the employee of the above requirements because failure to obtain the correct information will result in the employer paying the monthly subsidy allowance (max of US$40).

Lastly, the employer must attach three copies of their employees’ latest payroll before the suspension, marked with the company’s stamp on all pages, in addition to the company’s certificate of incorporation, relevant licenses (such as tourism licenses), tax certificates, bank details, and their National Security Fund (NSSF) number.

The NSSF is a government body responsible for providing social security for workers in the private sector.

Once the application is submitted, the MLVT will conduct a review and a labor inspector may visit the business within two days.

How much are suspended employees entitled to?

The period of suspension must follow the dates as approved by the MLVT. The suspended employee will be entitled to the following monthly subsidies, transferred through Wing Specialized Bank:

  • US$15 for 7-10 days of employment suspension;
  • US$30 for 11-20 days of employment suspension; and
  • US$40 for 21 days to one month of employment suspension.

The funds will be transferred 10 days after the date of suspension. The employee will receive a message on the registered phone number notifying them of the transfer which they must show, as well as their ID, to the nearest Wing Bank branch.

This must be done within the 10-day period otherwise the money will be transferred back to the government.

Suspension of NSSF payments

After the MLVT has approved the suspension of employment application, companies can then suspend their monthly NSSF payments. This is done by writing a formal letter to the NSSF; more information can be found on the MLVT website.

Special requirements for the garment industry

Garment companies who are suspending their employees must also provide allowances in the sum of the following:

  • US$10 for 7-10 days of employment suspension;
  • US$20 for 11-20 days of employment suspension; and
  • US$30 for 21 days to one month of employment suspension.

Businesses and their employees returning to work before the end date of the contract suspension must inform the MLVT at least two working days before the start of operations.


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ASEAN Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia and maintains offices throughout ASEAN, including in SingaporeHanoiHo Chi Minh City and Jakarta. Please contact us at asia@dezshira.com or visit our website at www.dezshira.com

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