Taxation in Cambodia: An introduction.

Taxation in Cambodia: An introduction

This is a fundamental introduction to taxation in Cambodia.

Both companies and individuals are subject to certain tax obligations, and it is important as a taxpayer to know how much tax must be paid and when it must be paid.

Let’s start.

1. Corporate income tax

What is corporate income tax?

Corporate income tax is the tax imposed on income that a company has earned, and the rates differ based on business activities, type of taxpayers, and residency.

Corporate income tax rates in Cambodia

The 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%.

Classification of Taxpayers in Cambodia

Taxpayers under the self-assessment regime shall be classified as small, medium and large taxpayers accordingly to their legal form, annual turnover, business sector, or value of the asset as summarised in below table according to Prakas no. 009 on Classification of Taxpayers issued by the Ministry of Economy and Finance dated 12 January 2021:

Type of taxpayersType of entityAnnual turnoverValue of business asset *
Small taxpayersAgricultural, service and commercial sectorsKHR 250 million to KHR 1,000 million
(Approx. USD 62,500 to USD 250,000)
 KHR 200 million to KHR 1,000 million
(Approx. USD 50,000 to USD 250,000)
Industrial sectorKHR 250 million to KHR 1,600 million
(Approx. USD 62,500 to USD 400,000)
KHR 200 million to KHR 2,000 million
(Approx. USD 50,000 to USD 500,000)
Participates in bidding, negotiation, quotation for supply of goods or services activity
Medium taxpayersAgricultural sectorKHR 1,000 million to KHR 4,000 million
(Approx. USD 250,000 to USD 1 million)
 KHR 1,000 million to KHR 2,000 million
(Approx. USD 250,000 to USD 500,000)
Service and commercial sectorsKHR 1,000 million to KHR 6,000 million
(Approx. USD 250,000 to USD 1.5 million )
Industrial sectorKHR 1,600 million to KHR 8,000 million
(Approx. USD 400,000 to USD 2 million )
KHR 2,000 million to KHR 4,000 million
(Approx. USD 500,000 to USD 1 million)
Reregistered legal person or representative office;
National and sub-national government institutions, associations or non- government organizations, or projects under any of these institutions;
Foreign embassies and consulates, international organizations and technical cooperation agencies of other governments, or projects under those institutions.
Large taxpayersAgricultural sectorMore than KHR 4,000 million
(> Approx. USD 1 million)
More than KHR 2,000 million
(> Approx. USD 500,000 )
service and commercial sectorsMore than KHR 6,000 million
(> Approx. USD 1.5 million )
Industrial sectorMore than KHR8,000 million
(> Approx. USD 2 million)
More than KHR 4,000 million
(> Approx. USD 1 million )
– Subsidiary of a multi-national corporation, branch of foreign company;

-Enterprises registered as a Qualified Investment Project

* Note: If taxpayers’ turnover declared does not accurately reflect their real turnover, the General Department of Taxation (GDT) has authority to reassess the classification of taxpayers.

Deadline for payment and submission of corporate income tax returns 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 paid during the year.

Deadline for payment and submission of monthly tax returns

Further to Instruction 003 issued by the Ministry of Economy and Finance dated 27 February 2020 on the E-filing system and new monthly tax return forms, the deadline for monthly tax returns (MTRs) via the GDT’s E-filing or GDT Taxpayer Application is by the 25th of the following month; while hard filing of MTRs is by the 20th of the following month.

However, if the deadline falls on a weekend or public holiday, the deadline will be extended to the next working day.

Find out more in our Corporate Income Tax Guide.

Never miss an important deadline with our detailed compliance calendar.

  • Get a clear picture of all the accounting, tax and HR deadlines
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Compliance Calendar

 

2. Personal income tax

What is personal income tax?

Personal income tax is a direct tax imposed on the income of an individual. Although personal income tax is not yet enforced in Cambodia, the mechanism available for individuals to pay tax is via Tax on Salary withholding which is paid monthly by the taxpayers’ employer.

Who is a tax resident?

The term resident taxpayer will apply to a physical person who meets one of the three conditions below:

  1. Any physical person who is domiciled in the Kingdom of Cambodia
  2. Has a principal place of abode in the Kingdom of Cambodia
  3. Is present in Cambodia for more than 182 days (in one or many visits) during the current taxable year

If condition (1) and (2) is not able for judgment as to whether the physical person is resident taxpayer, then condition (3) shall be applied as the final judgment.

Who is a non-resident?

Non-residents are individuals who are not residents as defined above.

Types of taxable personal income

1. Tax on Salary (TOS)

Salary is all types of remuneration and benefits received by an employee.

This includes:

  • Salary and wages
  • Redundancy payments
  • Bonuses
  • Overtime
  • Compensation

2. Tax on Fringe Benefit (TOFB)

Fringe benefits include and not limited to the following:

  • Private use of motor vehicles
  • Meals and accommodation
  • Utilities
  • Household personnel expenses
  • Discounted sales
  • Educational assistance (except for employment job-related training)
  • Educational assistant offered to employee’s minor
  • Low-interest loans
  • Life and health insurance premiums not provided for all staff
  • Pension fund contributions that are more than 10% of the monthly salary
  • Entertainment or recreation expenses

What are the personal income tax rates?

On 13 February 2020, the Cambodian government issued a sub-decree to implement the new taxable income threshold for the monthly salary of residents and non-corporate business owners.

Residents are taxed at the following rates:

Monthly salary (KHR)Tax ratesCumulative deduction (KHR)
0 – 1.3 million0%0
1,300,001 – 2 million5%65,000
2,000,001 – 8.5 million10%165,000
8,500,001 – 12.5 million15%590,000
Over 12.5 million20%1,215,000

 

Non-residents are taxed at a flat rate of 20%.

Income earned from non-corporate business owners, including partnerships and sole proprietorships is subject to individual tax rates from 0% to 20%.

Annual taxable income (KHR)Rates
0 – 16 million0%
16,000,001 – 24 million5%
24,000,001 – 102 million10%
102,000,001 – 150 million15%
Over 150 million20%

 

Fringe benefits are taxed at a rate of 20%.

Find out more in our Personal Income Tax Guide.

3. Value-added tax (VAT)

What is VAT?

Value-added tax (VAT) is a tax that is added to the price of goods or services provided by a company.

What are the VAT rates?

The supply of goods and services in Cambodia are subject to the standard VAT rate of 10%.

The zero-rate applies to the following goods and services:

  • Goods and services supplied by Supporting Industry Qualified Investment Projects (QIPs)
  • Services performed within Cambodia but used outside of Cambodia directly or entirely by a non-resident entity
  • Services performed outside of Cambodia or used outside of Cambodia for a non-resident entity
  • Domestic supplies of paddy rice
  • Domestic supplies of milled rice or milled rice production services by contractors to the rice exporters
  • Domestic supplies of specific agricultural products, including all types of fertilisers, plant seeds, animal medicine, animal food, animal species and agricultural machinery and tools
  • Cut, Make and Trim (CMT) services – CMT services are provided by garment factories in Cambodia
  • Supply of international transportation services
  • Supporting industries that supply export-oriented garments, textile and footwear industries

Supplies not subject to VAT

Non-taxable supplies include:

  • Public postal services
  • Medical and dental goods and services
  • Wholly state-owned public transportation services
  • Insurance services
  • Primary financial services, which profit is from deposit, credit or loan transactions, initial public offerings of stock, trading of stock, currency exchange or trading of gold
  • Educational services
  • Non-profit activities recognised by the Ministry of Economy and Finance
  • Unprocessed agricultural products
  • Supply of water and electricity
  • Solid and liquid waste collection services

Find out more in our VAT Guide.

4. Withholding tax

What is withholding tax?

Withholding tax is the tax withheld by a resident taxpayer on certain payments made to Cambodian resident taxpayers and to non-residents of Cambodia.

What are the withholding tax rates?

The withholding tax rates on payments to residents are as follows:

Payment Rate
Income received by a physical person, from services including management, consulting and other similar services15%
Payment of royalties for intangible assets and interest in minerals, oil or natural gas15%
Interest paid to a physical person or a company, except for interest paid to a Cambodian bank or savings institution15%
Income from the rent of movable and immovable property10%
Interest paid on a fixed deposit made by a Cambodian bank or savings institution to a resident taxpayer6%
Interest paid on a savings account made by a Cambodian bank or savings institution to a resident taxpayer4%

 

Find out more in our Withholding Tax Guide.

Conclusion

Complying with your tax obligations is an essential duty as a taxpayer in Cambodia. To ensure your company tax compliance status and to avoid unnecessary tax penalties, Acclime can assist you in the preparation and submission of tax returns and provide tax and business advisory in accordance with the laws and regulations in Cambodia.

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