Cambodia’s tax system has seen significant developments over the past decade as the government continues to modernise its revenue collection and improve compliance. Administered primarily by the General Department of Taxation (GDT), the system includes a range of direct and indirect taxes that apply to both individuals and businesses. Understanding how taxation works in Cambodia is essential for ensuring compliance, avoiding penalties and making informed business decisions.
This article provides a comprehensive overview of the key taxes in Cambodia, including corporate income tax, tax on salary, value-added tax (VAT), withholding tax and other relevant obligations.
- Businesses are classified as small, medium or large taxpayers based on their annual turnover, business assets and legal structure, which determine their tax rates.
- The standard corporate income tax rate in Cambodia is 20% but preferential or higher rates may apply.
- Although a formal personal income tax is not imposed, employers must deduct Tax on Salary monthly based on rates up to 20% for resident employees.
- Cambodia offers a 0% VAT rate for certain export-oriented activities and supporting industries.
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%.
The 30% corporate tax rate applies to companies involved in oil or natural gas production or the exploitation of natural resources such as timber, ore, gold and precious stones.
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 the 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 taxpayers | Type of entity | Annual turnover | Value of business asset * |
|---|---|---|---|
| Small taxpayers | Agricultural, service and commercial sectors | KHR 250 million to KHR 1,000 million (Approx. USD 62,500 to USD 250,000) | KHR 200 million to KHR 1 billion (Approx. USD 50,000 to USD 250,000) |
| Industrial sector | KHR 250 million to KHR 1,600 million (Approx. USD 62,500 to USD 400,000) | KHR 200 million to KHR 2 billion (Approx. USD 50,000 to USD 500,000) | |
| – | Total expected turnover for next three consecutive months from KHR 60 million | – | |
| Participates in bidding, negotiation, quotation for supply of goods or services activity | – | – | |
| Medium taxpayers | Agricultural sector | KHR 1 billion to KHR 4 billion (Approx. USD 250,000 to USD 1 million) | KHR 1 billion to KHR 2 billion (Approx. USD 250,000 to USD 500,000) |
| Service and commercial sectors | KHR 1 billion to KHR 6 billion (Approx. USD 250,000 to USD 1.5 million) | KHR 1 billion to KHR 2 billion (Approx. USD 250,000 to USD 500,000) | |
| Industrial sector | KHR 1.6 billion to KHR 8 billion (Approx. USD 400,000 to USD 2 million) | KHR 2 billion to KHR 4 billion (Approx. USD 500,000 to USD 1 million) | |
| Reregistered as a representative office or a legal entity | – | – | |
| National and sub-national government institutions, associations or non- government organisations, or projects under any of these institutions | – | – | |
| Foreign embassies and consulates, international organisations and technical agencies of other governments | – | – | |
| Large taxpayers | Agricultural sector | More than KHR 4 billion (> Approx. USD 1 million) | More than KHR 2 billion (> Approx. USD 500,000) |
| Service and commercial sectors | More than KHR 6 billion (> Approx. USD 1.5 million) | More than KHR 2 billion (> Approx. USD 500,000 ) | |
| Industrial sector | More than KHR 8 billion (> Approx. USD 2 million) | More than KHR 4 billion (> Approx. USD 1 million) | |
| Registered as a multinational company or a foreign branch office | – | – | |
| 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. | |||
Corporate income tax returns submission and payment
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.
Personal income tax
What is personal income tax?
Cambodia does not levy a formal personal income tax, instead, it imposes a Tax on Salary on individuals earning income within the country. This tax not only applies to wages but also other forms of compensation, including bonuses, allowances and fringe benefits.
Determining tax residency
The term resident taxpayer will apply to a physical person who meets one of the three conditions below:
- Any physical person who is domiciled in the Kingdom of Cambodia
- Has a principal place of abode in the Kingdom of Cambodia
- Is present in Cambodia for more than 182 days (in one or many visits) during the current taxable year
If conditions (1) and (2) are not able to be applied as to whether the physical person is resident taxpayer, then condition (3) shall be applied as the final judgment.
Non-residents are individuals who are not residents as defined above.
Types of taxable personal income
- 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
- Fringe benefits tax (FBT)
Fringe benefits include:
- Private use of motor vehicles
- Meals and accommodation
- Utilities
- Household personnel expenses
- Educational assistance (except for employment job-related training)
What are the personal income tax rates?
The Cambodian government introduced a new tax income threshold for the monthly salary of residents under Sub-Decree 196. The new thresholds came into effect on 1 January 2023.
Residents are taxed at the following rates:
| Monthly salary (KHR) | Tax rates |
|---|---|
| 0 – 1.5 million | 0% |
| 1,500,001 – 2 million | 5% |
| 2,000,001 – 8.5 million | 10% |
| 8,500,001 – 12.5 million | 15% |
| Over 12.5 million | 20% |
Non-residents are taxed at a flat rate of 20%.
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 is 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
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 services | 15% |
| Payment of royalties for intangible assets and interest in minerals, oil or natural gas | 15% |
| Interest paid to a physical person or a company, except for interest paid to a Cambodian bank or savings institution | 15% |
| Income from the rent of movable and immovable property | 10% |
| Interest paid on a fixed deposit made by a Cambodian bank or savings institution to a resident taxpayer | 6% |
| Interest paid on a savings account made by a Cambodian bank or savings institution to a resident taxpayer | 4% |
Conclusion
Cambodia’s tax system continues to evolve in support of its growing economy. Understanding the classification of taxpayers, applicable tax rates and key filing obligations is essential for individuals and businesses operating in the country. Whether managing corporate income, personal salary or VAT obligations, compliance with Cambodian tax law ensures smoother business operations and helps avoid penalties. With increasing digitisation of processes such as e-filing and growing government oversight, staying up to date with tax requirements is more important than ever.
How Acclime can help with taxation in Cambodia
Acclime Cambodia offers complete support related to tax compliance and planning for businesses operating in Cambodia. From tax registration to ongoing compliance advisory, our team of experts can assist with everything from understanding corporate income tax and VAT requirements to preparing and submitting tax filings and managing interactions with local tax authorities.
By partnering with us, local and foreign businesses can confidently meet their tax obligations and optimise their tax position. Contact us to learn more about how we can support your specific needs for tax compliance and strategic tax planning.
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