H.E. Mr. PRAK Sokhonn, Senior Minister, Minister of Foreign Affairs and International Cooperation
 Her Majesty the Queen-Mother NORODOM MONINEATH SIHANOUK of Cambodia
 His Majesty Preah Bat Samdech Preah Boromneath NORODOM SIHAMONI, the King of Cambodia
 Samdech Akka Moha Sena Pedei Techo HUN SEN, Prime Minister of the Kingdom of Cambodia


 General overview

Most foreign investments and foreign investors will be affected by the following taxes:

  •     Tax on Profit
  •     Minimum Tax
  •     Various withholding taxes (e.g. Tax on profit withholding obligations)
  •     Value Added Tax
  •     Turnover Tax
  •     Import Duties
  •     Salary Tax on Cambodian and expatriate employees

There are various other taxes affecting certain categories of investor, including:

    Specific Tax on Certain Merchandise and Services
    Various other minor taxes

Scope of taxation

Cambodia's taxation rules vary according to a particular taxpayer's "regime". Most activities associated with foreign investments fall into the "real regime". Therefore, unless otherwise stated, the following text refers to real-regime taxpayers.

Tax on Profit seeks to tax business profits and designated passive income. Business profits include capital gains. Passive income includes interest, royalties and rental income. Dividend income is usually exempt (see comments on Advance Tax on Dividends below).

Various taxpayer entities are recognised, including companies, partnerships and individuals. In addition, there is an internationally recognised Permanent Establishment (PE) definition included in the recent 1997 Law on Taxation.

Residency and source

Cambodian residents are taxable on worldwide income/profits, while non-residents are taxable only on Cambodian - sourced income/profits. Residents earning foreign-sourced income/profits are entitled to receive credits for foreign taxes incurred.

Cambodian residents include companies that are "organised or managed" in Cambodia, or that have their "principal place of business" in Cambodia. In terms of individuals, a non-Cambodian national will be considered a resident by having a "domicile" or making his or her "principal place of abode" in Cambodia, or by being present in Cambodia for more than 182 days in a calendar year.

Rate of Tax

The standard rate of Tax on Profit for companies and PEs is 20%. Resident individuals are taxed at progressive rates up to a ceiling of 20%. Non-resident companies and individuals may be subject to tax on a withholding basis (see below).

A preferential rate of 9% is available from the CDC where certain criteria are met and the proposed activity is being specifically encouraged by the government. Preferential rates are granted for the life of the relevant investment. A preferential rate can be granted, following approval and issuance of the relevant license by the CDC.

Oil and gas, together with certain other mineral exploitation activities, are subject to tax at a rate of 30%.

Insurance activities are taxable at a rate of 5% of gross premium income.


A Tax on Profit prepayment, equal to 1% of turnover, must be paid on a monthly basis by the 15th day of the following month. The prepayment may be offset against the annual Tax on Profit liability and the Minimum Tax (see below).

Where a taxpayer has a Tax on Profit exemption, the taxpayer is also exempt from prepayment obligations (but not the obligations for Minimum Tax).

Tax holidays

Certain investors may be granted tax holidays by the CDC. These holidays take the form of a complete exemption from Tax on Profit. The exemption period begins from the first year in which the project becomes profitable (but before the offset of losses). The duration of these holiday periods can be up to eight years. A Tax on Profit exemption also relieves the taxpayer of Tax on Profit prepayment obligations (see above).

Refunds on reinvestment

The amount of "positive taxable profit" in any one year may be reduced depending on the extent to which it is reinvested in plant and equipment in the same year. The depreciable value of plant and equipment must, however, be reduced by the same degree.

Calculation of taxable profits

For Cambodian residents, taxable profit is essentially the difference between total revenue, whether from domestic or foreign sources, and "allowable expenses" paid or incurred in carrying out the business, plus designated passive income such as interest, royalties and rent.

Allowable and non-allowable deductions

Cambodia's tax rules contain a general deductibility provision under which all expenditure satisfying the general criteria will be deductible, unless specific provisions apply, such as where an item falls into the list of non-deductible expenditure.

Specific deductibility provisions apply to the following expenditure:

    (a) Designated payments to company officers, directors etc. - deductible to the extent the payments are "reasonable".
    (b) Plant- and building-related interest and tax - to the extent incurred during the construction/acquisition phase, the expenditure must be capitalised and depreciated on the relevant property.
    (c) Interest not failing into (b) - deductible to the extent of interest income and 50% of residual income. The non-deductible portion may be carried forward into the following year's calculation.
    (d) Expenditure on tangible property - depreciable at designated rates. For CDC-licensed entities these rates are:
Item Straight-line depreciation rate
        Building 5%
        Property (4 years of useful life) 25%
        Property (4 to 8 years of useful life) 12.5%
        Other tangible property 10%
    (e) Expenditure on intangible property - depreciable over the life of the property (or at 10% annually).
    (f) Expenditure constituting exploration and development costs - amortizable with reference to the exploitation of the relevant natural resource.
    (g) Charitable contributions - deductible to the extent that the amount does not exceed 5% of taxable profit.
    (h) Amusement, recreation and entertainment - non-deductible.
    (i) Personal expenditure not subject to Salary Tax - non-deductible.
    (j) Tax on Profit itself, including cases in which the tax is paid on another taxpayer's behalf - non-deductible.
    (k) Certain losses suffered on sales to (51%) related parties - non-deductible.
    (l) Purchases from "simplified regime" taxpayers - deductible on a cash basis only.

Taxpayers may carry forward their losses for up to five years. The carry-back of losses is not permitted. There is no provision for any form of consolidated filing or group loss relief.

Transfer Pricing

Article 18 of the 1997 Law on Taxation provides the Cambodian authorities with wide powers to redistribute income and deductions between parties under "common ownership", in order to prevent "avoidance or evasion of taxes" Common ownership exists at the relatively low level of 20%.

Article 19 (4) of the 1997 Law on Taxation automatically denies a deduction for certain losses incurred on dealings between 51% commonly owned parties.


Tax on Profit returns must be filed annually within three months of the end of the tax year. The standard tax year is the calendar year, although different accounting year-ends can be granted upon application. The 1% Tax on Profit prepayments are due on a monthly basis, by the 15th day of the following month.


General overview

Real-regime taxpayers are subject to a separate Minimum Tax. The Minimum Tax is an annual tax with a liability equal to 1% of the taxpayer's turnover during the year in question.

As a separate tax to Tax on Profit, Minimum Tax is due "irrespective of any Tax on Profit exemption or the taxpayers" profit or loss position.


Minimum Tax is due three months after the financial year-end and, therefore, at the same time as the annual Tax on Profit. A Minimum Tax liability may be reduced by Tax on Profit payments, including prepayments.

Advance Tax on Dividends

Cambodia's Law on Investment contains a general guarantee against the taxation of repatriated profits. Consequently, dividends are generally not subject to a dividend withholding tax. Instead, the company paying the dividend is required to pay an Advance Tax on Profit at the time of dividend distribution. This advance payment is levied at the prevailing Tax on Profit rate of the dividend-paying company and on the gross dividend value.

The advance payment is creditable (except in the case of insurance companies) to the dividend paying company (not the shareholder) against future Tax on Profit payments.

A 20%-interest shareholder is entitled to establish a special "dividend account", from which the relevant dividend may be paid without further advance payment obligations.

Dividends for which Advance Tax on Profit has already been paid are exempt from Tax on Profit.

Other payments

The 1997 Law on Taxation introduced a draft for Tax on Profit-related Withholding Obligations for certain income payments. Of importance here, is that these obligations only apply to payments made by residents (and to those who are also under the "real regime"). The withheld tax also constitutes a final tax when withheld in respect of non-residents.

The types of payments are as follows:


Payment by a resident to

- a resident not constituting a Cambodian bank 15%

- any non-resident 15%

Payment by a resident bank to

- a resident individual on non-savings deposits 5%


Payment by any resident to

- any (non-real regime) resident 10%

- any non-resident, where property used is in Cambodia 15%

Consulting payments

Payment by any resident to

- a resident individual only 1 5%

- any non-resident, where services are performed in Cambodia 1 5%

Royalties (including those for minerals, oil and gas)

Payment by any resident to

- any resident 15%

- any non-resident, where property used is in Cambodia 15%

Capital gains-sale of immovable property

Payment by any resident to

- any resident N/A

- any non-resident, where property is located in Cambodia 15%

Gains-sale movable property

Payment by any resident to

- any resident 15%

- any non-resident N/A

Insurance premiums

Payment by any resident to

- any resident N/A

- any non-resident, where risk is in Cambodia 15%

Withheld Tax on Profit must be remitted by the income payer on a monthly basis by the 1 5th day of the following month.


General overview

Value Added Tax (VAT) was implemented for "real regime" (i.e. large and/or incorporated) taxpayers on I January 1999.

Under the VAT system, "output tax" is collected from a customer by adding VAT to the amount charged. However, a business also pays an "input tax" to its suppliers on purchases made. The business must pay the output tax after deducting the input tax paid to its suppliers. In theory, the business therefore pays tax on the value that it adds in the supply chain. The tax is ultimately borne by the consumer or a business that is exempt from the tax, as consumers/exempt businesses cannot recover input tax paid.

Scope of application

Cambodia's VAT system is currently restricted to the business activities of real-regime taxpayers producing taxable supplies (and certain importers, see below). Real-regime taxpayers include most large and/or incorporated taxpayers involved in the production, trade and provision of services. In each case, the business must charge VAT on the value of goods or services supplied. Non-real regime taxpayers may be included in the VAT system at a later stage.

VAT also applies to the duty-paid value of imported goods. There are concessions, however, for exporters, certain tax-exempt bodies, and cigarette , alcoholic and automotive products imported for the purposes of re-export. Imported goods may be treated as including associated services. The importer must pay VAT to Customs at the same time as the importer pays Import Duties.

VAT may be payable on the appropriation of goods for personal use and on gifts.

Exempt goods and services

VAT is not payable on a number of activities, including the supply of

- Public postal services

- Hospital and medical services, and the provision of goods for these activities.

- Public transportation activities operated by owned providers

- Insurance activities

- Certain financial services

- The importation of certain personal effects

- Non-profit activities in the public interest (as approved)

If a business sells exempt goods or services, it will be unable to recover any input tax paid on its purchases. This contrasts with "zero rating", where sales are within the VAT system (albeit at a VAT rate of zero), and hence input tax can be recovered. Where a business generates both taxable and exempt sales, it will only be able to claim a deduction of input for that portion of inputs used in the taxable activity.

Rates of tax

There are two rates of VAT as follows:

0% - This rate applies only to goods exported from Cambodia and services 'consumed" outside Cambodia. Exports are defined as including the international transportation for passengers or goods, and the services connected to this international transportation.

10% - This standard rate applies to all other non-exempt supplies.

Basis of taxation

The output tax is generally calculated by multiplying the taxable value (net of VAT) taken from the invoice price by the applicable VAT rate. With respect to imported goods, VAT is calculated on the CIF imported price plus Import Duty plus any Specific Tax on Certain Merchandise and Services.

For goods sold on a hire-purchase or financial-lease basis, VAT is calculated on the total price at the time of supply, as opposed to the installments actually received. For goods made available under rental or periodic payment arrangements, the goods are treated as being successively supplied.

Input credits are available for VAT charged on entertainment, certain petroleum products and the purchase of passenger motor vehicles.


All real-regime taxpayers producing supplies of taxable goods and services in Cambodia should register for VAT. Voluntary registration for non-real regime taxpayers and CDC-licensed entities in the pre-operation phase is also possible.


For domestic supplies, taxpayers are required to file VAT returns and make VAT declarations and payments on a monthly basis, by the 20th day of the following month. For imports, VAT is payable to Customs at the time of importation.

Where a taxpayer's input VAT for the month exceeds output VAT, the business generally has to carry the excess forward for three months. The business can then apply for a refund from the tax authorities. Special refund rules apply for exporters and CDC-licensed entities in the pre-operating phase. Detailed rules exist with regard to specific invoicing and record-keeping obligations. Invoices vary according to whether a VAT registered or non-registered person is being invoiced.


General overview

Until 31 December 1998, Turnover Tax applied to all persons or entities (whether local or foreign, company or individual) deriving revenue in Cambodia. With the introduction of VAT on 1 January 1999, Turnover Tax no longer applied to real-regime (large and/or incorporated) taxpayers. The former 4% Consumption Tax was also lifted on all importers (although VAT may still apply).

Turnover Tax continues to apply to non-real regime taxpayers at the flat rate of 2%. For Turnover Tax purposes this includes revenue from the supply of goods or services (although most exports are exempt).

Turnover not subject to Turnover Tax is limited to the following areas:

- the sale of unprocessed agricultural produce, where sold by the producer

- certain small-business activities

- the majority of exports.

Basis of taxation

Turnover Tax is a tax on gross turnover received. It is not a VAT. It is generally calculated by multiplying the total amount invoiced by the applicable rate. It is common for the tax to be passed on by the invoicing party. In such a case the Turnover Tax collected is generally accepted as the full Turnover Tax liability (i.e. there is no grossing up).

Rates of tax

Since 1 January 1999, Turnover Tax has been levied at the flat rate of 2%.


Taxpayers must make monthly Turnover Tax declarations and payments, not later than the 10th day of the following month. Detailed rules exist with regard to specific invoicing and record-keeping obligations.


General overview

The Specific Tax on Certain Merchandise and Services is a form of excise 'tax that applies to the importation or domestic production and supply of certain goods and services.

Rates of tax

The goods/ services and rates of tax are as follows:


Most automobiles and parts displacement >2000cc : 30%

Most automobiles and parts displacement >2001cc : 20%

Most large automobiles (e.g. buses, trucks) 10%

Motorcycles - displacement >124cc 10%

Certain petroleum products 20%

Certain carbonated and similar non-alcoholic drinks 10%

Beer, wines and most other alcoholic beverages : 10%

Cigarettes and cigars 10%

Hotel accommodation and entertainment charges: 10%

International air tickets - commencing in Cambodia: 2%

Certain international telecommunication activities: 2%

Note that the implementation of the Specific Tax on hotel room rental has been postponed until further notice.

Basis of taxation

For domestically produced goods, Specific Tax is generally due on the "ex-factory selling price" For imported goods, the tax is due on the CIF value inclusive of Customs Duty. For air, hotel and telecommunication services, the tax is generally payable on the invoice price, although for air tickets this is limited to tickets issued in Cambodia.



For domestic sales, taxpayers must make Specific Tax declaration fund payments on a monthly basis, not later than the 10th day of the following month. For imports, Specific Tax is payable to Customs at the time of importation. Detailed rules exist with regard to invoicing and record-keeping obligations.


Import Duties

Import Duties are levied on a wide range of products. Rates are generally 7%, 15%, 20%, 3 5% or 50%.

Investment incentives

Import Duty exemptions can be granted by the CDC as an investment incentive. Exemptions can apply to:

- Construction materials.

- Plant and equipment (and related spare parts) to be used in production.

- Raw materials and intermediate goods to be used in production.

Investment projects typically entitled to Import Duty incentives include:

- Export orientated (minimum 80%) projects.

- Projects located in Special Promotion Zones.

- Projects in the tourism industry.

- Labor-intensive production projects.

- Projects in infrastructure and energy.

Export Duties

Export Duties are levied on only a limited number of items, such as timber and certain animal products (including most seafood).


General Overview

Cambodia's Salary Tax regulations follow internationally accepted residency and source principles. A Cambodian resident's worldwide salary is subject to Cambodian Salary Tax. For non-residents, only the Cambodian sourced salary is subject to Salary Tax. The location of the salary payment is not relevant in determining the source.

Cambodia draws a distinction between cash salary and "fringe benefits". Cash salary is taxable to the employee while Salary Tax due on fringe benefits is payable by the employer.

Salary Tax extends to employment-related remuneration only, as opposed to general personal income per se. Genuine consulting income is also excluded (although such income is subject to Tax on Profit). These rules enable the authorities to consider certain consultants as employees.


A Cambodian resident is defined as an "employee, taxpayer, or person" who is:

- domiciled in Cambodia, or

- has his/her principal place of abode in Cambodia, or

- is physically present in Cambodia for more than 182 days in a calendar year.

Taxable Salary

A distinction is made between cash and fringe benefit salary components. Different tax scales apply.

Cash salary

Cash salary includes remuneration, wages, bonus payments, overtime, compensation and employer-provided loans and advances.

Fringe Benefits

Fringe benefits include:

- the use of motor vehicles;

- the provision of accommodation support (including utilities and domestic helpers);

- low-interest loans and discounted sales;

- educational assistance (unless employment related, for example for training);

- certain insurance support;

- Excessive or unnecessary" cash allowances, and social welfare and pension contributions;

- Entertainment or recreational expenditure (which may additionally be non-deductible to the provider for Tax on Profit purposes).

Exempt Salary

Exempt salary includes:

- certain redundancy payments;

- reimbursement of employment-related expenses;

- certain traveling allowances;

- certain uniform entitlements;

- the salaries of employees of approved diplomatic, international and aid organisations;

- the salaries of non-residents where the salary cost is not deducted in Cambodia.


These are limited to small statutory amounts for an employee's dependents, and for the repayment of employer loans or advances.

Salary Tax Rate

Cash Salary - Resident

Monthly salary (Riels) Rate

0 - 500,000 0%

500,001 - 1,250,000 5%

1,250,001 - 8,500,000 10%

8,500,001 - 12,500,000 15%

12,500.001 - upwards 20%

Cash Salary - Non-resident

The rate for non-residents is a flat 15%. This tax also constitutes a final tax.

Fringe Benefits

Fringe benefits are taxable on the employer (not the employee) at the flat rate of 20% of the market value of the benefit.

As the rate scales are stated in Cambodian Riel, earnings in foreign currency have to be converted into Riel. Official exchange rates are provided for this purpose.


Employees must make monthly salary tax declarations and payments, not later than the 15th of the following month. There is no annual return.


Tax on House and Land Rent

Businesses (other than real-regime) renting out land, buildings, certain equipment, storage facilities etc. are liable to Tax on House and Land Rent. The tax is levied at 100/o of the relevant rental fee. This tax is not imposed where Tax on Profit has been withheld from the rental payment (see earlier comments on withholding taxes).

Patent Tax

Registered businesses must pay a nominal Patent Tax on initial business registration, which then becomes payable on an annual basis thereafter. Patent Tax is levied with reference to the prior year's turnover or estimated turnover.

Fiscal Stamp Tax

Fiscal Stamp Tax is paid on certain official documents and, perhaps more importantly for foreign investors, certain advertising postings and signage. Amounts vary according to such factors as the location of the signage, illumination and the language used (foreign or Cambodian).

Tax on Unused Land

Land in towns and other specified areas, without construction, or with unused construction, and certain developed land, is subject to Tax on Unused Land. The tax is calculated by the Commission for the Evaluation of Unused Land, on 30 June every year. The first 1,200 sq m of land is free of tax. The owner of the land is required to pay the tax by 30 September each year.

Registration Tax (or "Transfer Tax")

Certain documents relating to the establishment, dissolution or merger of a business, or the transfer of title in certain assets (such as land vehicles) are subject to Registration Tax. The tax is generally levied at 4% of the transfer value.

Tax on Means of Transportation

This tax imposes a number of statutory fees on the registration of certain transportation vehicles, including trucks, buses, motor vehicles and ships.

1999 Finance Law

The 1999 Finance Law specifies taxes levied on the distribution of certain petroleum, cigarette and alcohol products.
Important Link
Preah Karuna Preah Bat Samdech Preah Boromneath Norodom Shimoni, King of Cambodia http://www.norodomsihamoni.org/
Ministry of Foreign Affairs and International Cooperation http://www.mfaic.gov.kh/
Ministry of National Defense http://www.mod.gov.kh/
Ministry of Commerce www.moc.gov.kh/
Other Link
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