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Thresholds of annual taxable profit and monthly taxable salary to increase for employees from 2023.

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Sub-Decree no. 196 dated 28 September 2022 in Cambodia has introduced changes to the thresholds of annual taxable profit and monthly taxable salary for employees working in the country.

Threshold of monthly taxable salary

The current threshold of salary of resident employees subject to Tax on Salary (TOS) at 0% is KHR1,300,000 (~USD325) which was changed from KHR1,200,000 (~USD300) on 13 February 2020.

To further reduce the TOS burden on the employees, especially the workers, the threshold subject to TOS at 0% has been amended from KHR1,300,000 (~USD325) to KHR1,500,000 (~USD375). This change will take effect from 1 January 2023.

Please refer to the below table for the details of the change of the threshold for the calculation of a progressive rate of TOS for resident employees.

Portion of monthly taxable salary (KHR)Tax rate
From0to 1,500,0000%
From1,500,001to 2,000,0005%
From2,000,001to 8,500,00010%
From8,500,001to 12,500,00015%
Over 12,500,00020%

The term salary refers to remuneration, redundancy payments, bonuses, overtime, any compensation and fringe benefits which are paid to the employee or which are directly or indirectly benefited the employee for the fulfilment of employment activities.

The relief of KHR150,000 (~USD37.5) each for “a child under 14 years old or 25 years old if still at school” and “dependent housewife” is also granted to resident employees. This relief amount remains unchanged.

The calculation method of TOS is as follows:

Portion of monthly taxable salary (KHR)Tax rateFormula
From0to 1,500,0000%
From1,500,001to 2,000,0005%Taxable Salary*5% – 75,000
From2,000,001to 8,500,00010%Taxable Salary*10% – 175,000
From8,500,001to 12,500,00015%Taxable Salary*15% – 600,000
Over 12,500,00020%Taxable Salary*20% – 1,225,000

Threshold of annual taxable profit

The threshold of annual taxable profit was amended on 13 February 2020. To reduce the profit tax burden of “a physical person”, “a sole proprietorship”, or “a member of a partnership who is not considered as a legal person“, the threshold subject to profit tax at 0% has been amended from KHR16,000,000 (~USD4,000) to KHR18,000,000 (~USD4,500) as detailed in the below table.

Portion of annual taxable profit (KHR)Tax rate
From0to 16,000,0000%
From16,000,001to 24,000,0005%
From24,000,001to 102,000,00010%
From102,000,001to 150,000,00015%
Over 150,000,00020%
Portion of annual taxable profit (KHR)Tax rate
From0to 18,000,0000%
From18,000,001to 24,000,0005%
From24,000,001to 102,000,00010%
From102,000,001to 150,000,000

150,000,000

15%
Over 150,000,00020%

Currently, only individuals / sole proprietorships who meet the registration threshold (e.g. annual turnover of KHR250 million (~USD62,500)) are required to register with the GDT which means the above taxable profit threshold is not applicable to the individuals / sole proprietorships that do not meet the registration threshold.

The above thresholds are effective from 1 January 2023 onwards.

Contact our teams for expert support and further information about accounting & tax requirements in Cambodia to ensure you are compliant in the market.

Hugh Darwell, Director, Business Development, h.darwell@acclime.com
Seng Pov, Head of Tax, s.pov@acclime.comm

Thresholds of annual taxable profit and monthly taxable salary to increase for employees from 2023

About Acclime Cambodia.

Acclime Cambodia helps established multinational companies and startups start and operate their business in Cambodia and the region. By seamlessly navigating our clients through the complexities of Cambodian laws and bureaucracy, we allow them to reclaim valuable time and fully focus on growing and developing their business.