Corporate income tax in Cambodia.

Corporate income tax is a key component of Cambodia’s tax system, applying to both resident and non-resident companies operating in the country. The corporate income tax regime is tiered, with rates and obligations varying by taxpayer classification, company size, industry sector and residency status. Cambodia also offers a range of tax incentives to promote investment, support small and medium enterprises and encourage economic expansion.

This guide provides an overview of corporate income tax in Cambodia, including applicable rates, filing requirements, tax incentives and deductions.

Corporate income tax rate in Cambodia

Corporate income tax rates in Cambodia range from 0% to 30%. The standard corporate income tax rate in Cambodia for companies that are classified as medium and large taxpayers is 20%. Companies classified as small taxpayers are taxed at rates from 0% to 20%. Additionally, as of 2026, Cambodia has officially implemented a Capital Gains Tax (CGT) at a flat rate of 20% on gains derived from the sale or transfer of investment assets.

Additional corporate income tax rates:

Taxpayer classification

In Cambodia, taxpayers are classified as small, medium or large based on their annual turnover, business assets and type of activity. This classification determines the level of compliance obligations and reporting requirements applied by the General Department of Taxation (GDT).

Tax residency of a company

Tax residency determines whether a company is taxed on its worldwide income or only on Cambodia-sourced income. In Cambodia, a company is considered a resident taxpayer if it is organised or managed in the country or has its principal place of business there. Resident taxpayers are subject to tax on their global income, while non-resident companies and branches are taxed only on Cambodia-sourced income.

Permanent establishment in Cambodia

A permanent establishment (PE) defines when a non-resident company has a sufficient taxable presence in Cambodia to be subject to corporate income tax on its local income. The GDT considers a PE to exist where a non-resident carries on business through a fixed place in Cambodia, such as a branch, office, factory, workshop, warehouse or place of management.

A PE may also arise from:

• Construction or installation projects lasting more than six months
• Natural resource exploration or exploitation activities using heavy equipment exceeding 90 days in a 12-month period
• A dependent agent who habitually concludes contracts or holds stock on behalf of the company

If a PE exists, the non-resident must register with the GDT, file tax returns and pay tax on Cambodia-sourced income.

Do remote employees or contractors trigger a PE risk in Cambodia?

Remote employees in Cambodia can create a PE risk even without a formal office. Risk increases where employees habitually work in Cambodia, perform core business functions or have authority to conclude contracts. Purely administrative roles are generally lower risk, but sales, client-facing or decision-making roles may trigger a PE.

Engaging independent contractors does not automatically create a PE, provided they operate independently and serve multiple clients. However, a PE risk arises if the contractor works primarily for your company, is subject to close control or has authority to bind the business in contracts. The key consideration is the level of control and economic dependence.

Can agents create PE in Cambodia?

A local sales agent may create a PE if they act as a dependent agent, meaning they habitually conclude contracts on behalf of the company. Agents operating independently and representing multiple principals are less likely to trigger a PE, but risk increases where they work exclusively for your business or lack commercial independence.

Year of assessment and corporate tax return filing

Understanding Cambodia’s tax year and filing deadlines is essential for maintaining compliance and avoiding penalties. Companies should align their reporting cycles with statutory timelines set by the tax authorities.

What is the year of assessment in Cambodia?

The year of assessment (YA) for companies in Cambodia is the calendar year, from 1 January to 31 December.

When to submit the corporate income tax return in Cambodia?

The annual tax return must be filed within three months after the tax year-end. The corporate income tax or minimum tax liability can be reduced by prepayment of corporate income tax payments.

Prepayment of corporate income tax

Corporate taxpayers must make monthly corporate income tax prepayments, also known as the Prepayment of Tax on Income. It is calculated at 1% of the company’s monthly turnover.

The prepayment is due by the 20th of the following month for hard copy filing, and due by the 25th of the following month for e-filing.

If taxpayers are in the tax holiday period, they are also exempt from the prepayment obligation, but a monthly return must be lodged.

What is the minimum tax?

Minimum tax is separate from the corporate income tax and imposed at a rate of 1% on annual turnovers, excluding VAT. If the corporate income tax is less than the minimum tax, then the company must pay the minimum tax. The prepayment paid for the year will be equal to the minimum tax of the company.

If the corporate income tax is lower than the prepayment of corporate income tax payments, then no refund is due to the taxpayer as the prepayment of corporate income tax will be used to offset the minimum tax obligations.

Companies that maintain proper accounting records may be exempt from the minimum tax.

What are the non-deductible expenses?

The non-deductible expenses in Cambodia include:

• Accounting depreciation
• Donations, grants or subsidies
• Extravagant and/or unrelated business expenses
• Expenses on activities considered to be recreation or entertainment
• Increase in provisions
• Loss on sales or exchange of property, directly or indirectly, between related parties
• Withholding tax, tax on salary and fringe tax benefits paid on behalf of recipients
• Loss on the disposal of fixed assets as per accounting record
• Penalties, additional tax and late payment interest imposed for violation of the Law of Taxation
• Salary unpaid within 180 days of the next year
• Expense with related parties unpaid within 180 days of the next year
• Other non-deductible expense

Late tax filing penalties

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:

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.

What depreciation is deductible in Cambodia?

Property is depreciated at specific rates if the property is used for the purpose of carrying on business. Property depreciation is classified into four classes, and the straight-line or declining balance method is applied to each class of property.

Rubber crops are eligible for depreciation over a period of 20 years using the straight-line depreciation method with rates as follows:

Other crops apart from rubber should be calculated by the straight-line method based on the beneficial life of the productivity or 5% per year, whichever is shorter.

Animal husbandry should be calculated by the straight-line method based on beneficial life of the productivity or 10% per year whichever is shorter.

Tax incentives available in Cambodia

Cambodia offers a range of tax incentives to support business growth, investment and priority sectors. These incentives vary based on company size, industry and investment activity.

Tax incentives for small and medium enterprises

The Ministry of Economy and Finance (MEF) issued Prakas No. 159 Prk to guide the implementation of tax incentives for small and medium-sized enterprises (SMEs).

SMEs that are entitled to tax incentives include:

• Agricultural or agro-industrial products
• Food production and processing
• Manufacturers producing domestic consumers goods, waste recycling and produce goods for the tourism sector
• Research and development involving information technology (IT), including services for management through IT systems
• Enterprises located the SME cluster zones and enterprises developing the cluster zone

Tax incentives for SMEs include:

A three-year or five-year tax on income exemption from the registration date for new companies or for existing companies if the companies meet any of the following conditions:

• Uses at least 60% of local raw materials
• Increases its staff by 20%
• Located in the SME cluster

Tax incentives for expansion of qualified investment projects

On 10 May 2024, the GDT issued Prakas No. 313, granting income tax incentives for the expansion of QIPs. The regulation allows income tax exemptions for various types of expansion, including:

• Increasing existing production capacity
• Diversifying product lines within the same production category
• Adopting new technologies that improve productivity or support environmental protection
• Other forms of expansion to be defined in future sub-decrees

The duration of the income tax exemption depends on the QIP’s investment activities and classification under the Sub-Decree on the Implementation of the Investment Law:

• Nine years for Group 1 businesses
• Six years for Group 2 businesses
• Three years for Group 3 businesses

Under the refined guidelines of Prakas No. 313, Expanded Qualified Investment Projects (EQIPs) are required to calculate their exemption rate based on the ratio of actual invested capital. The tax holiday for expansions also begins from the date the expanded activity first generates income, ensuring the incentive aligns with when operations become commercially active.

Conclusion

Understanding Cambodia’s corporate income tax framework is essential for businesses seeking to operate or invest in the country. With its tiered tax rates, classification system and diverse incentive schemes, the Cambodian tax system is designed to balance revenue generation with economic development. By staying compliant and leveraging available incentives, companies can effectively manage their tax obligations while contributing to the country’s growth.

How Acclime can help with corporate income tax compliance in Cambodia

To ensure that your corporate income tax filings are accurate and compliant with Cambodia’s laws and regulations, we recommend engaging with Acclime’s tax services. Our local team can assist with calculating and filing your monthly prepayments and annual returns, assessing your eligibility for exemptions such as the minimum tax waiver and helping you maintain proper accounting records. With Acclime’s support, you can reduce the risk of penalties and focus on growing your business with confidence.