{"id":2025,"date":"2023-02-14T12:10:10","date_gmt":"2023-02-14T04:10:10","guid":{"rendered":"https:\/\/www.manhattansez.com\/?p=2025"},"modified":"2023-05-26T13:34:22","modified_gmt":"2023-05-26T05:34:22","slug":"cambodia-tax-guide","status":"publish","type":"post","link":"https:\/\/www.manhattansez.com\/en\/cambodia-tax-guide\/","title":{"rendered":"Decoding Taxes in Cambodia: A Comprehensive Guide to Understanding Taxation Laws and Regulations"},"content":{"rendered":"\n
Are you interested in learning about the Cambodia tax system? The taxation system in Cambodia is governed by the Law on Taxation (LoT), a comprehensive piece of legislation adopted by the National Assembly in 1997 and amended in 2003. The LoT outlines the general principles and regulations of taxes in Cambodia, while further clarification and detail are provided by the Ministry of Economy and Finance through the issuance of Prakas. The most recent addition to this regulatory framework is the ToI regulation (Prakas no. 098, dated 29 January 2020), which supersedes the previously established ToP regulation (Prakas no. 1059, dated 12 December 2003). In this article, we will provide an overview of the tax laws in Cambodia and explore the key provisions of the LoT and its accompanying regulations.<\/p>\n\n\n\n
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Corporate income tax refers to the tax imposed on the earnings generated by a company. In Cambodia, the corporate income tax rate varies depending on the company’s size and residency status.<\/p>\n\n\n\n
In general, the corporate income tax (CIT) rate in Cambodia is set at 20 percent. However, it’s important to note that the actual rates may differ within a range of 0 percent to 20 percent. <\/p>\n\n\n\n
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Expanded Corporate Income Tax Rates in Cambodia In addition to the standard corporate income tax (CIT) rate, there are specific scenarios where different tax rates apply. These additional rates aim to accommodate various industries and business types. Here are some examples:<\/p>\n\n\n\n
It’s crucial for businesses to understand these rates and comply with the applicable tax regulations. By gaining clarity on corporate income tax in Cambodia, companies can effectively manage their tax obligations and make informed financial decisions.<\/p>\n\n\n\n
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Small companies in Cambodia typically include sole proprietorships and partnerships. They can be identified based on the following criteria:<\/p>\n\n\n\n
Understanding the categorization of small, medium, and large companies in Cambodia is essential for compliance with relevant regulations and taxation requirements based on the company’s size and activities.<\/p>\n\n\n\n
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The principal taxation law in Cambodia is the Law on Taxation (also known as the Tax Law), which serves as the primary legislation governing taxation in the country. The Law on Taxation provides the legal framework for various types of taxes, their administration, collection, and enforcement. It was enacted to regulate the taxation system in Cambodia and ensure compliance with tax obligations.<\/p>\n\n\n\n
The Law on Taxation covers a wide range of taxes, including but not limited to:<\/p>\n\n\n\n
The Law on Taxation outlines the rates, exemptions, deductions, procedures, and penalties related to each tax. It also establishes the roles and responsibilities of the General Department of Taxation (GDT), the government agency responsible for tax administration and enforcement.<\/p>\n\n\n\n
It’s important for individuals, businesses, and taxpayers in Cambodia to be familiar with the provisions of the Law on Taxation to ensure compliance with their tax obligations and understand the rights and obligations associated with taxation in the country.<\/p>\n\n\n\n
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In Cambodia, a resident taxpayer is typically defined as a company that is organized or managed within Cambodia or has Cambodia as its principal place of business. This means that the company is considered a resident for tax purposes and is subject to taxation on its worldwide income in Cambodia.<\/p>\n\n\n\n
On the other hand, a non-resident taxpayer refers to a person or entity that does not meet the criteria of being a resident taxpayer. Non-resident taxpayers are individuals or companies that do not have a permanent establishment in Cambodia but may have business activities or transactions within the country. The following scenarios would classify an individual or entity as a non-resident taxpayer:<\/p>\n\n\n\n
It’s important for both resident and non-resident taxpayers to understand their tax obligations and comply with the relevant tax laws and regulations in Cambodia based on their residency status and business activities conducted within the country.<\/p>\n\n\n\n
A company is considered a resident of Cambodia if it meets either of the following criteria:<\/p>\n\n\n\n
CIT, or Corporate Income Tax, refers to the tax levied on the income of corporations or businesses. The tax treatment for worldwide income and Cambodia-sourced income depends on the residency status of the taxpayer.<\/p>\n\n\n\n
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The Ministry of Economy and Finance (MEF) issued Prakas No. 159 Prk established the implementation of tax incentives for small and medium-sized enterprises (SMEs).<\/p>\n\n\n\n In Cambodia, tax depreciation or capital allowances refer to the deduction of the cost of assets over their useful life for tax purposes. <\/p>\n\n\n\n The Law on Taxation specifies the useful life of various types of assets and the allowable percentage that can be depreciated each year. The depreciation rate may vary depending on the type of asset and industry. The cost of the asset is spread over its useful life, and this depreciation expense is used to reduce the taxpayer’s taxable income.<\/p>\n\n\n\n Capital allowances, on the other hand, allow businesses to claim a deduction for the cost of capital assets when calculating their taxable income. The deduction is based on the cost of the asset and the type of asset. The allowable deduction may be spread over a number of years.<\/p>\n\n\n\n Tax depreciation and capital allowances are important deductions for businesses in Cambodia as they can help reduce taxable income and result in lower tax liability.<\/p>\n<\/blockquote>\n\n\n\n <\/p>\n\n\n\n There is no specific thin capitalization legislation; however, a limitation on interest expense deduction is provided under the Tax on Income (ToI) regulation.<\/p>\n\n\n\n For petroleum and mineral resource operations in Cambodia, different rules apply to interest expense deductions.<\/p>\n\n\n\n <\/p>\n\n\n\nCompany Size<\/th> Annual Turnover (USD)<\/th> Number of Employees<\/th> Tax Incentives<\/th><\/tr><\/thead> Small-sized<\/td> 62,500 \u2013 175,000<\/td> 10-50<\/td> – Exemption from minimum tax<\/td><\/tr> <\/td> <\/td> <\/td> – Simplified tax registration and reporting procedures<\/td><\/tr> <\/td> <\/td> <\/td> – Preferential tax rates<\/td><\/tr> Medium-sized<\/td> 175,001 \u2013 1 million<\/td> 51-100<\/td> – Reduction of minimum tax<\/td><\/tr> <\/td> <\/td> <\/td> – Simplified tax registration and reporting procedures<\/td><\/tr> <\/td> <\/td> <\/td> – Preferential tax rates<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n Tax Depreciation & Capital Allowances<\/h3>\n\n\n\n
Class<\/td> Depreciation Method<\/td><\/tr> Intangible Assets<\/td> Depreciation of assets in Cambodia is either straight-line based on useful life or 10% straight-line if no specific useful life is specified. Purchased goodwill, which forms part of the intangible asset, is allowed to be amortized.<\/td><\/tr> Natural Resource<\/td> A deduction for depletion is allowed based on the total production during the year and the estimated total production from the natural resource.<\/td><\/tr> Agricultural Assets (e.g., rubber
plantation, other agricultural
crops, animal husbandry)<\/td>1. For rubber crops in Cambodia, the depreciation rate is allowed for 20 years with a depreciation rate of 3% to 5%, depending on the turnover year.
2. Non-rubber agricultural crops are depreciated in Cambodia on a straight-line basis based on the expected life of production or 5% per year, whichever is shorter.
3. Animal husbandry in Cambodia is depreciated on a straight-line basis based on the expected life of production or 5% per year, whichever is shorter.<\/td><\/tr>Class 1 Buildings & Structures<\/td> A 10% straight-line depreciation shall apply for “non-concrete” assets
A 5% straight-line depreciation rate is applied for “non-concrete assets”.<\/td><\/tr>Class 2: Computers, electronic
information systems, software,
and data handling equipment<\/td>50% diminishing value<\/td><\/tr> Class 3: Automobiles, trucks,
office furniture and equipment<\/td>25% diminishing value<\/td><\/tr> Class 4: All other tangible
property<\/td>20% diminishing value<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n \n
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Charitable contribution<\/h3>\n\n\n\n
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Interest Expense<\/h3>\n\n\n\n
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