Thresholds of annual taxable profit and monthly taxable salary to increase for employees from 2023.
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 | ||
|---|---|---|---|
| From | 0 | to 1,500,000 | 0% |
| From | 1,500,001 | to 2,000,000 | 5% |
| From | 2,000,001 | to 8,500,000 | 10% |
| From | 8,500,001 | to 12,500,000 | 15% |
| Over 12,500,000 | 20% | ||
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 rate | Formula | ||
|---|---|---|---|---|
| From | 0 | to 1,500,000 | 0% | – |
| From | 1,500,001 | to 2,000,000 | 5% | Taxable Salary*5% – 75,000 |
| From | 2,000,001 | to 8,500,000 | 10% | Taxable Salary*10% – 175,000 |
| From | 8,500,001 | to 12,500,000 | 15% | Taxable Salary*15% – 600,000 |
| Over 12,500,000 | 20% | 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 | ||
|---|---|---|---|
| From | 0 | to 16,000,000 | 0% |
| From | 16,000,001 | to 24,000,000 | 5% |
| From | 24,000,001 | to 102,000,000 | 10% |
| From | 102,000,001 | to 150,000,000 | 15% |
| Over 150,000,000 | 20% | ||
| Portion of annual taxable profit (KHR) | Tax rate | ||
|---|---|---|---|
| From | 0 | to 18,000,000 | 0% |
| From | 18,000,001 | to 24,000,000 | 5% |
| From | 24,000,001 | to 102,000,000 | 10% |
| From | 102,000,001 | to 150,000,000 150,000,000 | 15% |
| Over 150,000,000 | 20% | ||
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.
Should you require further clarification or wish to discuss the above matters in more detail, please do not hesitate to contact us.
Mr. Seng Pov
Head of Tax
Email: s.***@ac*****.com
M : +855 (0) 12 53 34 32
T : +855 (0) 23 21 59 60
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