CBG Instructional Guide
BUSINESS TAX OBLIGATIONS
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TAX OBLIGATIONS OF DIFFERENT BUSINESS STRUCTURES IN CAMBODIA
This page provides basic information on the business tax obligations of four (4) different business structures in Cambodia, listed below.
Click any of the links below to see the tax obligations of the business structure that best fits your business purpose and plan.
1
SOLE PROPRIETORSHIP
TAX OBLIGATIONS
1. MANNER OF TAX COMPUTATION
A sole proprietorship is subject to a tax payment obligation called the "self-declaration regime", which applies a tax computation based on "progressive individual tax rates".
2. CLASSIFICATION OF TAXPAYERS
- A foreign national, operating a business enterprise in Cambodia registered as a sole proprietorship and who has stayed in the country for more than 182 days within a period of 12 months, is classified as a "resident" taxpayer and will be required to pay taxes for income both derived from business operations in Cambodia (termed "local income") and from sources outside Cambodia (termed "worldwide income"). The amount of tax is based on the percentage assigned to a particular income level reached in a fiscal year.
- A foreign national who stays less than 182 days within a period of 12 months in Cambodia while earning an income from a source within the country is classified as a "non-resident" taxpayer and is required to pay a flat rate tax equivalent to 20% of the total income received.
3. TAX OBLIGATION ACCORDING TO LEVEL OF INCOME
The annual "tax on income" (TOI) for a resident taxpayer would be based on the percentage that will be taken from the total amount of income received in one fiscal year. A particular percentage of tax to be paid is computed from a particular level of income specified in the income bracket, as follows:
1. 0% tax for income level from zero to US$4,500.00
2. 5% tax for income level above US$4,500 to US$6,000
3. 10% tax for income level above US$6,000 to US$25,500
4. 15% tax for income level above US$25,000.00 to US$37,500
5. 20% tax for income level above US$37,500
4. MONTHLY PREPAYMENT OF TAX
- A sole proprietorship business enterprise is required to pay advance payments of income tax monthly in the manner called "monthly prepayment income tax" (referred to as "prepaid income tax" or PIT). These monthly payments serve as "advance payments" of the annual income tax. The sole proprietor of the business must make a minimum monthly prepayment equivalent to 1% of its monthly revenue (total monthly income), inclusive of all applicable taxes (except VAT).
- The monthly tax payment must be made not later than the 25th day of the month following the reported month of income, if the payment is made online through the internet app of the General Department of Taxation (GDT). If the payment is done manually, it must be made not later than the 20th day of the month following the reported month of income.
5. BASIS OF ANNUAL TAX OBLIGATION
In the filing of the final annual tax return, the actual annual tax bill is based on net profit. All the monthly prepayments already made are subtracted. Any overpayment is credited for the next year. In case of an underpayment, the difference must be paid with the annual tax return payment.
READ IMPORTANT ADVISORY
The government taxation authorities strongly advise foreign entrepreneurs and investors in Cambodia to appoint a local (Cambodian) business consulting firm or tax agent to assist in understanding tax payment computations and processes, particularly in understanding taxation laws and documents written in Khmer (the Cambodian language).
While the content of this Guide was based on available and obtainable data from the relevant government sources, it may only provide the basic information needed to be known by those who are planning to establish a business enterprise in Cambodia. There could also be changes without notice or inadvertent errors in the content. To ensure a greater understanding and more specific knowledge of tax obligations, the Cambodia Business Guide (CBG) advises the users of this Guide to further consult matters needing more clarification with an established business consulting firm or tax agent in Cambodia with competence to assist in the compliance of tax obligations. We can recommend a licensed and reputable business consulting firm or agent.
2
SINGLE-MEMBER PRIVATE LIMITED COMPANY
TAX OBLIGATIONS
In Cambodia, a Single-Member Private Limited Company is legally classified as a company, or a corporate entity, with its own legal personality and tax obligations. The tax is paid in the name of the corporation, not in the name of its single owner. This means that the tax payment obligation of the corporation is different from the individual income tax obligation of the owner.
The company must register for, declare, and pay its own corporate and operational taxes to the General Department of Taxation (GDT). It is subject to a method of tax payment obligation called the "self-assessment tax regime".
1. PRINCIPAL CORPORATE TAX OBLIGATIONS
Since it is classified as a corporation, it is subject to three Principal Corporate Tax Obligations. They are as follows:
1.1 Tax on Income (TOI): The standard corporate income tax rate is 20% of net taxable profit. If the company is categorized as a "small taxpayer" based on its turnover and/or assets, progressive rates from 0% to 20% may apply instead.
1.2 Minimum Tax (MT): Calculated at 1% of annual turnover (excluding VAT). If the 20% TOI calculation falls below this 1% threshold, the company must pay the Minimum Tax instead, regardless of whether it operated at a net loss. Companies keeping compliant, audited accounting records may seek an exemption.
1.3 Patent Tax: It is a fixed annual commercial registration tax based on the taxpayer's classification. Based on the classification of its capitalization and income, the Patent Tax ranges from roughly USD 100 to USD 1,250 per year and must be renewed annually.
2. MONTHLY TAX OBLIGATIONS
Every month, the company must submit its returns and payments via the GDT E-Filing System on or before the 25th day of the month following the reported month of income. They are as follows:
2.1 Prepayment of Tax on Income (Pre-TOI): A mandatory monthly payment of 1% of the previous month's turnover. This accumulated amount acts as a credit to offset the final annual TOI or Minimum Tax bill.
2.2 Value-Added Tax (VAT): A flat rate of 10% charged on the supply of goods and services. Output VAT collected from customers is netted against input VAT paid to suppliers before submitting the balance.
2.3 Withholding Tax (WHT): The company must withhold taxes when making specific local or foreign payments. Standard local rates range from 4% to 15% (e.g., for services, rentals, or interest).
2.4 Tax on Salary (TOS) & Fringe Benefits: If the single member or other staff are paid wages, the company must withhold progressive payroll taxes ranging from 0% to 20% for residents, or a flat 20% for non-residents. Non-cash benefits incur a flat 20% Fringe Benefits Tax.
3. ANNUAL FILING REQUIREMENTS
The annual filing of the Tax on Income (TOI) Return of a Single-Member Private Limited Company must be submitted electronically through the GDT Portal within 3 months of the financial year-end, which is March 31 for the standard calendar-year businesses.
Financial balance sheets, profit-and-loss statements, and a list of assets must be uploaded as supporting documents in the annual filing of the Tax on Income (TOI) Return.
4. EXEMPTION BENEFIT
A Single-Member Private Limited Company is given a particular exemption benefit. It does not need to prepare complex transfer pricing documentation for loans borrowed directly from the sole shareholder, provided the total loan balance remains under US$750,000.
READ IMPORTANT ADVISORY
The government taxation authorities strongly advise foreign entrepreneurs and investors in Cambodia to appoint a local (Cambodian) business consulting firm or tax agent to assist in understanding tax payment computations and processes, particularly in understanding taxation laws and documents written in Khmer (the Cambodian language).
While the content of this Guide was based on available and obtainable data from the relevant government sources, it may only provide the basic information needed to be known by those who are planning to establish a business enterprise in Cambodia. There could also be changes without notice or inadvertent errors in the content. To ensure a greater understanding and more specific knowledge of tax obligations, the Cambodia Business Guide (CBG) advises the users of this Guide to further consult matters needing more clarification with an established business consulting firm or tax agent in Cambodia with competence to assist in the compliance of tax obligations. We can recommend a licensed and reputable business consulting firm or agent.
3
(Standard) PRIVATE LIMITED COMPANY
TAX OBLIGATIONS
A business enterprise registered as a Private Limited Company is officially classified in Cambodia as a corporation. It is required to use the letters "Co., Ltd." at the end of its company name. It is subject to a tax payment obligation method called the "self-declaration tax regime."
Under this "tax regime," it must comply with three tax payment requirements, which are:
1) the initial and recurring administrative tax obligations
2) the monthly filing of tax returns
3) the annual tax declaration
The details of these three requirements are outlined below as follows:
1. INITIAL & RECURRING ADMINISTRATIVE TAX OBLIGATIONS
1.1 Tax Registration with the GDT
Within 15 days of receiving incorporation documents from the Ministry of Commerce (MOC), the company must open a corporate bank account and submit details to the General Department of Taxation (GDT). A director or chairman must attend a physical meeting at the tax office within 30 days for identity verification (photo and fingerprints).
1.2 Payment of Patent Tax
A business license is called a "Patent" in Cambodia. "Patent Tax" is a business license fee. The license needs to be renewed yearly. The deadline for the payment of the Patent Tax (or business license fee) is March 31 of each year. For Private Limited Companies, the amount of the fee depends on the classification of the company, whether it is classified as a "medium taxpayer" or a "large taxpayer". Since a Private Limited Company is categorized as a corporation, it is immediately classified as either a "medium taxpayer" or a "large taxpayer", depending on which particular business sector it belongs to and its annual turnover (or annual gross sales).
1.3 Sectoral Patent Tax Rates
To determine the appropriate tax rates, the GDT separates businesses into sectors. They are the Service and Commercial Sector, the Industrial Sector, and the Agricultural Sector. The bases of tax ratings in each sector are as follows:
1.3.1 In the SERVICE AND COMMERCIAL SECTOR
For Medium Taxpayer:
Having an annual turnover between US$250,000 and US$1,500,000, or having assets valued between US$500,000 and US$1,000,000. The yearly patent tax is US$300.
For Large Taxpayer:
Having an annual turnover exceeding US$1,500,000 or having assets valued to be exceeding US$1,000,000. The yearly Patent Tax is US$750 to US$1,250, depending on the GDT-prescribed level of amount reached by gross sales in one taxable year.
1.3.2 In the INDUSTRIAL SECTOR (MANUFACTURING/PRODUCTION)
For Medium Taxpayer:
Having annual turnover between US$400,000 and US$2,000,000 or having assets valued between US$1,000,000 and US$2,000,000. The yearly patent tax is US$300.
For Large Taxpayer:
Having annual turnover exceeding US$2,000,000 or having assets valued to be exceeding US$2,000,000. The yearly patent tax is US$750 to US$1,250, depending on the GDT-prescribed level of amount reached by gross sales in one taxable year.
1.3.3 In the AGRICULTURAL SECTOR
For Medium Taxpayer:
Having an annual turnover between US$250,000 and US$1,000,000, or having assets valued between US$250,000 and US$500,000. The yearly patent tax is US$300.
For Large Taxpayer:
Having an annual turnover exceeding US$1,000,000, or having assets valued to be exceeding US$500,000. The yearly patent tax is US$750 to US$1,250, depending on the GDT-prescribed level of amount reached by gross sales in one taxable year.
If the company's annual turnover and value of assets fall into different sectors, the GDT will require the tax payment to be based on the sector with the higher tax payment requirement.
2. MONTHLY TAX OBLIGATIONS
Monthly tax declarations and payments must be filed by the 20th day of the month following the month in which the income was reported, if filed by manual paper filing. It should be filed on the 25th day of the month if using the GDT E-Filing System. The monthly tax obligations are as follows:
2.1 Prepayment of Tax on Income (PTOI): Calculated as 1% of monthly turnover (inclusive of all taxes except VAT). This serves as a monthly advance credit against your end-of-year corporate tax bill.
2.2 Value Added Tax (VAT): A standard rate of 10% is charged on local sales of goods and services and importations. Exported goods and services are zero-rated (0% VAT).
2.3 Tax on Salary (TOS) & Fringe Benefits Tax (FBT): Employers must withhold monthly progressive salary taxes ranging from 0% to 20% for resident employees, or a flat 20% for non-resident employees. Fringe benefits (e.g., housing, vehicle allowance) are taxed at a flat 20% rate.
2.4 Withholding Tax (WHT): Taxes withheld on payments made to residents and non-residents for services, rental properties (usually 10%), royalties, or dividends.
3. ANNUAL TAX OBLIGATIONS
Annual returns must be submitted by March 31st of the subsequent calendar year.
3.1 Tax on Income (TOI / Corporate Income Tax): The standard corporate income tax rate is 20% on net taxable profits for medium and large taxpayers.
3.2 Minimum Tax (MT): Imposed at a flat rate of 1% of annual turnover (excluding VAT). It is a separate tax that must be paid regardless of whether the business turns a profit or suffers a loss. At the end of the year, you compare your 20% TOI liability against your 1% Minimum Tax obligation. Whichever amount is higher is what you ultimately need to pay. The credits from your monthly 1% PTOI prepayments are deducted from this final balance.
4. CAPITAL GAINS TAX
Private Limited Companies are subject to a 20% flat rate on gains derived from the sale, creation, or transfer of investment assets, including property, leases, stocks, and intellectual property.
READ IMPORTANT ADVISORY
The government taxation authorities strongly advise foreign entrepreneurs and investors in Cambodia to appoint a local (Cambodian) business consulting firm or tax agent to assist in understanding tax payment computations and processes, particularly in understanding taxation laws and documents written in Khmer (the Cambodian language).
While the content of this Guide was based on available and obtainable data from the relevant government sources, it may only provide the basic information needed to be known by those who are planning to establish a business enterprise in Cambodia. There could also be changes without notice or inadvertent errors in the content. To ensure a greater understanding and more specific knowledge of tax obligations, the Cambodia Business Guide (CBG) advises the users of this Guide to further consult matters needing more clarification with an established business consulting firm or tax agent in Cambodia with competence to assist in the compliance of tax obligations. We can recommend a licensed and reputable business consulting firm or agent.
4
PUBLIC LIMITED COMPANY
TAX OBLIGATIONS
Under the taxation rules and requirements of the General Department of Taxation (GDT), a Public Limited Company (PLC) in Cambodia shares the same foundational tax obligations as a Private Limited Company. They are both classified under the term "Limited Liability Company" (LLC).
A PLC, however, is automatically categorized as a Large Taxpayer under Cambodia's Self-Declaration Regime; it faces stricter compliance enforcement, mandatory independent audits, and specific withholding implications if listed on the stock exchange.
1. KEY CORPORATE TAXES
The key corporate taxes required to be complied with by a Public Limited Company (PLC) are the following:
1.1 Corporate Income Tax (CIT): The standard rate is 20% on annual worldwide net taxable profits.
1.2 Minimum Tax (MT): Calculated at 1% of total annual turnover (excluding VAT). PLCs are legally exempt from paying this tax if they maintain proper, certified accounting records, though they must still file the assessment.
1.3 Prepayment of CIT: A mandatory 1% monthly prepayment based on the company's total monthly turnover. This is credited against the final annual CIT liability.
1.4 Value-Added Tax (VAT): A flat 10% applied to all domestic supplies of goods and services.
2. OPERATIONAL & WITHHOLDING TAXES (WHT)
2.1 Tax on Salary (ToS)
This is a monthly progressive withholding tax ranging from 0% to 20% on local employee salaries. Non-resident employees are subject to a flat 20% rate.
2.2 Standard Withholding Taxes
PLCs making payments to residents or non-residents must withhold the following:
2.2.3 Rental Income: 10%
2.2.4 Resident Services/Interest/Royalties: 15% (10% for property rentals)
2.2.5 Non-Resident Payments: A flat 14% on interest, royalties, and management services.
2.3 Dividend Withholding Tax
Standard distributions to non-residents are subject to 14% WHT. However, if the PLC is publicly listed on the Cambodia Securities Exchange (CSX), it may qualify for specific tax incentives, including reduced corporate income tax rates or temporary dividend tax exemptions based on current Prakas (regulations) issued by the Ministry of Economy and Finance.
3. STRICT COMPLIANCE & AUDITING REQUIREMENTS
Unlike smaller private entities, a Public Limited Company (PLC) faces the highest tier of oversight.
- It is required to comply with the Mandatory Independent Audit. It must have its annual financial statements audited by an independent auditor, who is a certified public accountant (CPA), certified by the Kampuchea Institute of Certified Public Accountants and Auditors (KICPAA).
- Audited financial reports must be submitted directly to the Accounting and Auditing Regulator (ACAR).
- Classified as a large taxpayer, a PLC must pay the annual Patent Tax at the top-tier fee of about US$750 to US$1,250, depending on turnover. This is due not later than March 31 each year.
4. DEADLINES & PENALTIES
4.1 Monthly Filings: E-filing and payments for VAT, WHT, and the 1% CIT Prepayment must be finalized via the GDT portal by the 25th day of the following month (or the 20th if filing via hard copy).
4.2 Annual Filings: The comprehensive annual CIT return must be submitted within 3 months of the company's financial year-end (usually March 31 for calendar-year companies).
4.3 Penalties: Late submissions trigger progressive strict penalties from 10% to 40% of the tax due, plus a cumulative 1.5% monthly interest fee.
READ IMPORTANT ADVISORY
The government taxation authorities strongly advise foreign entrepreneurs and investors in Cambodia to appoint a local (Cambodian) business consulting firm or tax agent to assist in understanding tax payment computations and processes, particularly in understanding taxation laws and documents written in Khmer (the Cambodian language).
While the content of this Guide was based on available and obtainable data from the relevant government sources, it may only provide the basic information needed to be known by those who are planning to establish a business enterprise in Cambodia. There could also be changes without notice or inadvertent errors in the content. To ensure a greater understanding and more specific knowledge of tax obligations, the Cambodia Business Guide (CBG) advises the users of this Guide to further consult matters needing more clarification with an established business consulting firm or tax agent in Cambodia with competence to assist in the compliance of tax obligations. We can recommend a licensed and reputable business consulting firm or agent.
