Cambodian Tax Registration & Obligations
Find out what taxes your Cambodian business will need to pay and how to pay them.
1. How to register as a taxpayer
- The Law on Financial Management 2016, promulgated on December 17, 2015, abolished Cambodia’s former two-tier tax system, dropping the more informal Estimated Regime. As such, the country is left with a unified, one-regime system that will widen the taxpayer base, with all enterprises obliged to be registered under it.
- Businesses have 15 days after registering with the MoC to also register with the Department of Taxation to receive a Taxpayer Identification Number (TIN) and to register to pay Value Added Tax (VAT).
- When registering for the TIN, the company must also pay an annual business registration tax, known as a Patent Tax, for its first year of operation, though the figure is reduced if the business is registered after July 1.
- If a business is planning to engage in multiple activities, individual taxes are due on each separate business activity, as well as for each of the company’s locations.
2. When and how to pay the tax
- Following registration at the Ministry of Economics and Finance (MEF), the company is liable to pay various taxes each month, usually payable by the 15th of the following month, with the exception of VAT, which is due on the 20th.
- Payments must be accompanied by a signed declaration, together with copies of all invoices either issued or received by the company during the tax period.
- In addition to monthly tax filing, the company is required to file an annual return known as a “Tax on Profit” return. This is due no later than March 31.
- Following registration at the Ministry of Economics and Finance (MEF), a company is liable to pay various taxes each month, usually by the 20th. They include the tax on salary; the prepayment of profit tax (equal to 1% of turnover); and VAT (equal to the total VAT charged to your customers minus VAT payable to your suppliers).
- Following a recent revision of the 2017 Financial Law, all companies maintaining proper accounting records are exempt from paying the 1% Minimum Tax (MT exemption). Previously, only Qualified Investment Projects (QIP) were eligible for the exemption.
- Payments are first made to the bank and will be receipted. Once payment is made to the bank, the taxpayer lodges two copies of the return and the bank receipt with their local tax branch and, if accepted, a yellow receipt of tax lodgement and payment is provided with one copy of the return back to the taxpayer.
- The carried forward losses record in the books of account for the taxpayer is sometimes an unknown issue to the business owner. By law, it becomes null whenever there is a change of business activities or ownership. But as long as the ultimate ownership does not change, the taxpayer can apply for carried forward losses by sending a request letter to get confirmation from the Ministry of Economy and Finance.
3. Type of taxes that need to pay
- Value added tax (VAT): Any VAT invoiced by your company during the taxable period (typically 10% of net invoice value) is payable to the tax department, net of any VAT paid by the company to its suppliers during the same period.
- Prepayment of Profit Tax: An amount equal to 1% of turnover is payable. Any such tax paid is deducted from your company’s profit tax bill at the end of the year.
- Withholding Tax: As a taxpayer, you are required to withhold tax from payments made for services purchased from non real-regime entities, and in certain other circumstances. The amount to be withheld varies according to your particular situation, and can be as much as 15% for consulting or management service.
- Tax on Salary: Your company must pay taxes on any salaries paid to resident employees. Tax rates vary from 0-20% – with the top band coming into effect at a monthly salary of KHR 12.5m (approximately US$3,125). Non-resident employees are taxed at 20% of any salary sourced in Cambodia, and fringe benefits are also taxable at 20%.
- Tax on Profit: This is the debt of a resident taxpayer on income from Cambodian sources as well as from foreign sources. Audits may occur anytime within a three-year period of the submission of monthly or annual tax returns.
4. For Multiples Business activities
- Individual taxes are due on each separate business activity, as well as for each of the company’s locations.
- The tax is due thereafter on a yearly basis every January.