Weighing Risks and Returns: Cambodia’s Capital Gains Tax Is Fully in Force

Cambodia’s capital gains tax (CGT) is now fully in force, marking a structural change in how investors must calculate returns on asset disposals. From September 1, 2025, gains from securities, leases, intellectual property, goodwill, and foreign currency have come under a new flat 20 percent tax, with immovable property such as land and buildings to follow from January 1, 2026. This development arrives as Cambodia’s economy grows at a projected 4.8 to 5.2 percent in 2025, slightly slower than last year but still underpinned by steady foreign direct investment.

The introduction of CGT places Cambodia alongside regional peers that already tax asset gains, while raising new questions for boards and investors about competitiveness, structuring, and exit planning.

How the regime works in practice

Prakas No. 496 MEF.PRK sets out the rules on how capital gains are recognized, calculated, and enforced. A gain is realized once ownership or legal possession changes hands through a sale, a court judgment, or an official registration. For share transactions, realization also occurs if the seller loses control or when full payment is received. The taxable base is the selling price after deducting allowable expenses. When immovable property is included from 2026, taxpayers will have the option of applying an 80 percent standard deduction or documenting actual costs, while for all other assets, only the actual-cost method is available.

This makes robust documentation essential for taxpayers seeking to minimize exposure.

Compliance obligations extend beyond calculation. A transfer is not legally complete until the tax has been paid, which means that closing procedures and contractual arrangements must account for timely settlement. Declarations and payments must be made within three months of the realization event. Withholding responsibilities fall on Cambodian enterprises whose shares are being transferred, as well as on licensed settlement agents in the case of securities and certain financial transactions.

Exemptions remain narrowly defined but can make a meaningful difference. A principal residence held for at least five years is excluded, as are transfers between close relatives, assets belonging to the state or diplomatic institutions, and property used for public interest.

The issue of new shares to increase capital also falls outside the tax. Double taxation agreements offer potential relief where taxing rights are allocated to another jurisdiction, but in practice, this requires a formal application with supporting evidence before preferential treatment can be applied.

Regional benchmark: How Cambodia stacks up

To understand Cambodia’s new tax in context, it is useful to compare it with nearby ASEAN regimes.

In Vietnam, non-resident gains on shares in non-public companies will be taxed under revised rules from October 2025, though details remain pending. Gains on listed shares remain subject to a small transaction levy, such as 0.1 percent on gross sale value, rather than a net capital gains tax.

Thailand generally exempts individual investors from tax on securities trading, though corporate entities may be taxed at normal income tax rates, while real property gains are subject to their own regimes.

Malaysia applies a real property gains tax that varies with holding period, but most financial assets remain outside the scope of a separate capital gains tax.

Against this backdrop, Cambodia’s flat 20 percent tax appears relatively heavy for securities and intangible assets, while for real estate, it will align more closely with regional practice once the January 2026 enforcement begins.

Quantified case scenarios

Consider a non-resident corporate investor that sells shares in a Cambodian company on September 15, 2025, realizing a gain of US$5 million. The CGT liability is US$1 million, leaving US$4 million after tax. If a treaty applies and reduces the rate to 10 percent, the liability falls to US$500,000, highlighting the material impact of treaty planning.

A resident individual who sells a principal residence in late 2025 for a gain of US$1.2 million escapes tax entirely if the residence has been held for more than five years and the exemption is supported with documentation. By contrast, if that individual sells a second home in the same period with a gain of US$800,000, the full CGT applies, resulting in a tax bill of US$160,000.

A fund that disposes of land in December 2025, just before the January enforcement date for property, can avoid CGT altogether. However, if the same transaction is delayed until 2026, the fund must choose between the fixed 80 percent deduction and the actual-cost method, a decision that can shift the liability by hundreds of thousands of dollars depending on the history of acquisition and improvements.

Strategic priorities for boards and investors

Boards need to recalculate expected returns under Cambodia’s capital gains tax and measure them against outcomes in other jurisdictions. This involves applying both available calculation methods, testing double tax agreement relief at an early stage, and ensuring withholding obligations are built into deal structures so transfers are not delayed. For real estate, the remaining months of 2025 offer a final planning window before the rules extend to land and buildings in January 2026, while for securities, the regime is already in effect.

The new tax is not an administrative formality but a structural element of investment strategy. Its impact on net proceeds can be material, and managing it requires the same rigor as financing or valuation. Investors who approach capital gains tax proactively — through documentation, exemption planning, treaty use, and careful timing — will maintain competitiveness, while those who ignore it risk eroded returns and stalled transactions.

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