Cambodia eliminates withholding tax on royalties and interest for real regime taxpayers.

Cambodia has broadened its withholding tax (WHT) exemption regime, removing withholding tax requirements on royalty and interest payments between real regime taxpayers under a recent tax circular issued by the General Department of Taxation (GDT). The move aims to reduce administrative burdens and simplify tax compliance for businesses operating within the real regime.

Progressive expansion of WHT exemptions

Under the previous withholding tax framework, resident payers were generally required to withhold tax on royalty and interest payments, even where the recipient was registered under the real regime. Although service payments to real regime suppliers were already exempt, most royalty and interest payments remained subject to withholding.

In practice, this withholding did not result in a final tax cost, as amounts withheld could be credited against the recipient’s annual corporate income tax. However, the requirement to withhold and later claim credits created additional administrative work and cash flow timing differences for businesses.

Circular no. 024, issued on 31 December 2025 by the General Department of Taxation, removes this requirement by exempting all royalty and interest payments made between real regime and self-declaration regime taxpayers. This builds on earlier relief that had applied only to rental payments and limited categories of software-related royalties.

What this means for businesses

The expanded exemption means businesses operating under the real regime no longer need to withhold tax, file monthly WHT returns or remit tax on qualifying royalty and interest payments that would otherwise be offset through tax credits. This can ease operational compliance for accounts payable and treasury teams, particularly for companies making frequent cross-border royalty or intercompany interest payments under real regime arrangements.

The exemption applies specifically to transactions between real regime and self-declaration regime taxpayers. Payments to suppliers under alternative tax regimes, including the estimated regime or non-registered entities, remain subject to standard withholding tax requirements.

Continued compliance considerations

The exemption applies only to transactions between real regime and self-declaration regime taxpayers. Payments made to suppliers under other tax regimes, such as the estimated regime or entities not registered for tax, remain subject to Cambodia’s standard withholding tax requirements. Businesses should therefore confirm the tax status of their suppliers before relying on the exemption framework.

Cambodia’s WHT regime forms part of the broader tax framework administered by the GDT, which also includes monthly filing obligations for VAT, salary tax and other compliance requirements.

What companies can do next

As Cambodia continues to refine its tax administration environment, companies should review internal withholding tax procedures and ensure alignment with the expanded exemption provisions introduced under Circular no. 024. Acclime’s advisers can support clients with ongoing compliance, supplier verification and implementation of practical withholding tax processes.