Three common compliance mistakes made by Cambodian businesses.

Managing compliance in Cambodia can be challenging for both new and established businesses. While the government has made strides in simplifying business registration and compliance procedures, companies still face a range of obligations that must be carefully handled. Failure to comply can result in delays, fines, reputational damage or even business suspension. Many of the most common issues arise not from deliberate wrongdoing, but from a lack of awareness or misunderstanding of local laws and practices.

This article outlines some of the key compliance mistakes businesses in Cambodia frequently make and provides practical insights to help companies reduce risk and operate with greater confidence.

Submission of the annual declaration

Companies in Cambodia must file an Annual Declaration of Commercial Enterprise that states the current status and any changes that apply to the company. If the company has not made any changes, the declaration is still required to be submitted.

The annual declaration must be submitted to the Ministry of Commerce (MoC) and the deadline is three months after the end of the 12th month from the company’s incorporation date.

Failure to submit the declaration exposes the company to a fine of up to KHR 2 million (around USD 500). If the company fails to submit the annual declaration for three consecutive years, the company may be deemed illegal and be deregistered.

Accounting non-compliance

Not following the accounting rules is another compliance mistake that companies may make.

All books, records and documents must be in the Khmer language and Cambodian Riel and kept for at least 10 years at the business premise in Cambodia.

However, companies that carry out business with foreign countries or are subsidiaries of foreign companies are allowed to prepare accounting documents in English language and USD currency if the company has received approval from Accounting and Auditing Regulator (ACAR).

The accounting period in Cambodia coincides with the calendar year (1 January to 31 December).

Non-compliance penalties

For non-compliance, there are various types of fines the company could possibly face.

Delayed settlement of the penalties listed above from the date the penalty notice is received will be subjected to the following additional penalties:

• Over 30 days: double penalty amount
• Over 60 days: triple penalty amount
• Over 90 days: legal action may be initiated

Violation of tax provisions and additional tax

Once a company is registered, it must also be registered for tax by completing the General Department of Taxation’s (GDT) application form through the official registration service website.

The following documents must be attached:

• Proof of paid property tax or property information of the enterprise
• Bank account information (must be provided in digital form within 15 working days after tax registration. Failure to do so would result in the revocation of the given certificates from GDT).

Companies and individuals in Cambodia are subject to the following taxes:

• Corporate income tax
• Personal income tax (salary and fringe benefit tax, which must be prepared and submitted by the employer)
• Withholding tax
• Value-added tax (VAT)

When must tax returns be submitted?

Annual tax returns must be filed within three months after the tax year-end.

Monthly returns must be paid by the 20th of the following month. However, if the 20th falls on a weekend or a public holiday, the deadline will be extended to the next working day. If the monthly return is filed electronically, the deadline is the 25th of the following month.

What are the penalties for noncompliance?

According to article 125 of the Law on Taxation, the taxpayer or withholding agent is considered negligent if the amount of tax paid is less than the amount of tax as determined by tax provisions by no more than 10 percent. The taxpayer or withholding agent is also considered negligent if they fail to file a tax declaration or to pay tax at the date required by law.

According to article 126, the taxpayer or withholding agent is considered seriously negligent if the amount of tax paid is less than the amount of tax as determined by tax provisions by more than 10%.

Failure to file, late filing or filing of a fraudulent return will result in penalties with rates varying based on the nature of the non-compliance:

• 10%: Applied in cases of ordinary negligence, which includes failing to file a tax declaration or pay tax by the deadline, or if the amount of tax paid is less than the amount determined by tax provisions by no more than 10%.
• 25%: Applied in cases of serious negligence, where the amount of tax paid is less than the determined tax amount by more than 10%.
• 40%: Applied in cases where the GDT issues a unilateral tax reassessment, typically when the taxpayer fails to cooperate with the tax authorities.

In addition to the penalties, an interest charge of 1.5% per month is levied on the amount of underpaid or late-paid tax. This interest accrues from the original due date of the payment.

Conclusion

Ensuring compliance in Cambodia requires a clear understanding of local laws, consistent internal processes and timely communication with government authorities. While most businesses do their best to stay compliant, even minor oversights, such as using an unapproved sub-leased office or failing to meet filing deadlines, can result in significant penalties, registration rejections or reputational harm. Most non-compliance issues are from simple misunderstandings or lack of familiarity with regulatory expectations, particularly among foreign investors. By proactively addressing compliance obligations and staying up to date with regulatory changes, companies can reduce risk, avoid costly mistakes and establish a strong, sustainable presence in Cambodia.

How Acclime can help with compliance requirements

Staying compliant with Cambodia’s evolving regulatory landscape can be complex, especially when managing ongoing obligations across multiple government agencies. Acclime offers tailored support to help businesses of all sizes meet their compliance requirements confidently and on time. From company registration and tax filing to accounting, reporting and annual declarations, Acclime’s local experts provide end-to-end guidance to ensure nothing is overlooked. Whether you are setting up a new company or reviewing your existing operations, feel free to contact us to discuss how we can support your business.