An Overview of the Cambodia Tax System

The Cambodian tax system is governed by the Law on Taxation and administered by the General Department of Taxation (GDT). The system relies on a self-assessment model, where taxpayers calculate and remit their own tax liabilities. Both residents and non-residents who generate income within Cambodia must understand their duties to ensure compliance.

Taxation for Individuals

An individual’s tax residency in Cambodia is determined by their physical presence. A person is considered a tax resident if they have a principal place of abode in the country or are present for more than 182 days in a calendar year. Residents are subject to tax on their worldwide income, whereas non-residents are only taxed on income sourced from within Cambodia.

The primary tax for individuals is the Tax on Salary (ToS), a monthly tax on employment income. For residents, this tax is applied progressively to their monthly salary, with rates from 0% for income up to KHR 1,500,000 to 20% for income over KHR 12,500,000. Non-residents are subject to a flat 20% tax on their Cambodian-sourced salary, which is a final tax.

The taxable salary base is comprehensive, including base salary, overtime pay, bonuses, and various cash allowances from an employer. Employers are responsible for withholding this tax from their employees’ salaries and remitting it to the GDT each month.

A separate Tax on Fringe Benefits applies to non-cash benefits an employee receives. This tax is levied at a flat rate of 20% on the market value of the benefits provided, such as a private motor vehicle or accommodation. Employer contributions to a pension fund exceeding 10% of an employee’s salary are also included. The employer is responsible for paying this tax.

Individuals may also be subject to a 20% capital gains tax on the sale of assets like securities, investment assets, and business property. The implementation of this tax on gains from the sale of immovable property by individuals has been postponed until the end of 2025. When calculating the gain on immovable property, taxpayers can deduct either actual expenses incurred or a standard 80% of the sales price.

Taxation for Businesses

Corporate entities in Cambodia are primarily subject to the Tax on Profit (ToP), with a standard rate of 20% for most medium and large taxpayers. Certain activities, such as exploiting natural resources like oil or gas, are taxed at a higher rate of 30%.

A Minimum Tax is calculated at 1% of a company’s total annual turnover, inclusive of all taxes except for Value Added Tax. This tax is payable only if it exceeds the company’s regular ToP liability for the year. Taxpayers that maintain proper and complete accounting records are exempt from the Minimum Tax.

Businesses must also pay an annual Patent Tax, a fixed registration fee due by March 31st each year to maintain a valid business license. The amount varies based on the taxpayer’s classification as small, medium, or large, which is determined by factors like annual turnover.

To ensure consistent revenue, businesses make monthly prepayments toward their annual profit tax, known as the Prepayment of Tax on Profit (PToP). PToP is calculated as 1% of the monthly turnover, including all taxes except VAT. These payments are credited against the final annual ToP or Minimum Tax liability.

Indirect and Withholding Taxes

Value Added Tax (VAT) is an indirect tax applied to most goods and services at a standard rate of 10%. Certain supplies are zero-rated, including goods exported from Cambodia and services rendered for non-resident entities outside the country.

Businesses with an annual turnover exceeding certain thresholds or those participating in government bidding must register for VAT. Registered businesses charge VAT on sales and can claim credits for VAT paid on their business purchases and expenses.

The Specific Tax on Certain Goods and Services is levied at various rates on a select list of products. Taxed items include alcoholic beverages, tobacco products, certain motor vehicles, and air travel services.

The Withholding Tax (WHT) system requires the payer of an invoice to withhold a percentage of the payment and remit it to the GDT. For payments to residents, rates are 15% for services, royalties, and interest. For payments to non-residents, a 14% rate applies to items like interest, royalties, rent, and technical service fees.

Property and Transfer Taxes

An annual Tax on Immovable Property is levied on properties valued above KHR 100 million (approximately USD 25,000). The tax is calculated at 0.1% on the value of the property exceeding this threshold. The property’s value is determined by a commission from the Ministry of Economy and Finance.

The government also imposes a Tax on Unused Land in cities and specified areas where land has no construction or is abandoned. The tax is 2% of the land’s market value per square meter, as determined by the Unused Land Appraisal Committee. This tax is payable by September 30th of each year.

The Registration Tax is a 4% tax imposed on the transfer of ownership for assets like immovable property and vehicles. This tax functions like a stamp duty and is payable by the party receiving the asset. It is a requirement for legally registering the change in ownership.

Tax Compliance and Administration

To become tax compliant in Cambodia, individuals and businesses must first register with the General Department of Taxation (GDT). This process involves obtaining a Taxpayer Identification Number (TIN), which is a unique identifier used for all tax filings.

Taxpayers have regular filing obligations under the self-assessment system. This includes the monthly submission of returns for the Prepayment of Tax on Profit, Tax on Salary, VAT, and applicable Withholding Taxes. These returns are due by the 20th of the following month, or the 25th if filed electronically.

In addition to monthly filings, businesses must submit an annual Tax on Profit return. The deadline for filing the annual return and paying any outstanding tax is within three months after the end of the tax year.

The GDT may conduct tax audits to verify the accuracy of declarations, reviewing accounting records and other documents. Taxpayers are required to maintain complete accounting records for ten years. Penalties for non-compliance or late payment can include fines from 10% to 40% of the unpaid tax, plus interest of 1.5% per month.