Cambodia Tax Regime

Cambodia operates a self-declaration tax system administered by the General Department of Taxation (GDT), under which taxpayers are classified as small, medium or large based on turnover, legal form and sector, with classification driving both the applicable corporate tax rate and the compliance burden. The standard corporate income tax rate — still commonly referred to by its legacy name, tax on profit — is 20% for medium and large taxpayers and permanent establishments, with progressive rates from 0–20% for small taxpayers and higher sector-specific rates for oil, gas, mineral exploitation and insurance. A separate annual minimum tax applies by reference to turnover rather than profit, reflecting the GDT's continued reliance on turnover-based backstops alongside the standard profit tax. Cambodia's investment regime, administered through the Council for the Development of Cambodia and Qualified Investment Project (QIP) status, is a central feature of the system, offering tax holidays or accelerated depreciation to approved projects. Cambodia has not adopted the OECD Pillar Two global minimum tax framework as of June 2026.

1.1 Sources

Primary legislation includes the Law on Taxation (as amended), the Law on Financial Management enacted annually, the Law on Investment 2021 and its sub-decrees, and prakas (ministerial regulations) issued by the Ministry of Economy and Finance and the GDT.

1.2 Recent developments

Cambodia continues to refine taxpayer classification criteria (small, medium, large) by turnover band and sector, which determine both the applicable CIT treatment and access to the progressive small-taxpayer rate schedule under Article 20 of the Law on Taxation. The minimum tax — an annual 1% levy on turnover inclusive of all taxes except VAT — remains disapplied for self-declaration taxpayers that maintain proper accounting records, a relief introduced by the 2017 Law on Financial Management, though the GDT has not issued a definitive standard for what constitutes qualifying records, leaving practical uncertainty for taxpayers seeking the exemption. The Law on Investment 2021 continues to shape incentive design, favouring a menu of either a corporate tax exemption period (up to a statutory maximum) or a special depreciation allowance, together with import duty exemptions on production equipment and construction materials for registered Qualified Investment Projects.

Headline statutory corporate income tax rate for a resident company. Where sub-national (state, provincial, cantonal or municipal) corporate taxes apply, the combined rate reported by the OECD is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

Top marginal statutory personal income tax rate on employment income for a resident individual. Where sub-national (state, provincial, cantonal or municipal) income taxes are a standard part of the system, the combined top rate is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

2.1 Rates and residence

Resident taxpayers are taxed on worldwide income; non-residents and permanent establishments are taxed only on Cambodian-source income. The standard CIT rate for medium and large taxpayers (including PEs) is 20%. Small taxpayers — broadly, sole proprietorships and partnerships below turnover thresholds that vary by sector (agricultural, service/commercial or industrial) — are instead taxed at progressive rates from 0% to 20% under Article 20 of the Law on Taxation. Oil and gas exploitation and certain mineral exploitation activities are taxed at 30%. Insurance companies are taxed at 5% on gross premium income from insurance and reinsurance activities and at the standard 20% rate on other (non-insurance) income; net interest income of insurers received after withholding of 4% or 6% is excluded from taxable income. There are no provincial or local income taxes in Cambodia — CIT is levied exclusively at the national level.

Taxpayer classification (small, medium or large) depends on annual turnover thresholds that differ by sector — for example, medium-taxpayer turnover for the industrial sector runs from KHR 1.6 billion to KHR 8 billion, while for services and commerce it runs from KHR 1 billion to KHR 6 billion — together with legal form (registered legal persons and QIPs are automatically medium or large regardless of turnover) and other qualitative criteria. The GDT may re-determine a taxpayer's classification where declared turnover does not reflect actual business activity, assessed by reference to the value of business assets employed.

2.2 Dividends and participation exemption

Cambodia does not operate a participation exemption. Dividend distributions by a resident enterprise out of after-tax retained earnings are generally not subject to additional withholding tax when paid to another resident enterprise; where retained earnings have not previously borne tax at the full standard rate (for example, distributions out of tax-exempt or tax-holiday profits), an additional profit tax charge (equivalent to a distribution tax, calculated by grossing up the distribution against the standard rate) applies to the paying entity to true up the tax previously foregone. Dividends paid to non-resident shareholders are subject to withholding tax, subject to available treaty relief. There is no group-level consolidation of dividend flows; each Cambodian entity is assessed on a standalone basis.

2.3 Income determination and deductions

Taxable profit is computed from accounting profit prepared under Cambodian Accounting Standards (aligned with a local variant of IFRS for larger entities), adjusted for tax-specific rules. Expenses are deductible if incurred for the purpose of the business, properly supported by invoices, and not specifically disallowed; non-deductible items commonly include unsupported expenses, certain related-party charges lacking arm's-length support, penalties and fines, and a portion of expenses linked to exempt or non-taxable income. Depreciation follows prescribed methods and rates by asset class — generally declining-balance for most classes of tangible movable property and straight-line for buildings and intangibles — with special depreciation allowances available as an alternative incentive for QIPs in lieu of a tax holiday. Losses on bad debts are deductible only where specific write-off conditions are satisfied.

2.4 Interest limitation

Interest expense deductibility is limited: net non-related-party interest expense in excess of interest income plus 50% of net non-interest profit is disallowed in the year incurred but may be carried forward for offset against future interest capacity, subject to an overall carryforward period. Related-party interest is additionally subject to arm's-length pricing requirements and to thin-capitalisation-style scrutiny where debt levels are not commensurate with the borrower's business. Interest paid to a resident bank or financial institution licensed in Cambodia is generally excluded from the limitation calculation, reflecting the rule's focus on related-party and offshore financing arrangements.

2.5 Losses

Tax losses may be carried forward for offset against taxable profits for up to five years, provided the taxpayer has not changed its business activity or ownership in a manner that breaks continuity, and provided monthly and annual returns have been filed on time for the loss-making year and each intervening year. There is no loss carryback. Losses forfeit if the enterprise fails to maintain the required continuity of accounting and filing compliance, which in practice makes consistent monthly compliance a precondition for preserving loss carryforwards.

2.6 Group taxation

Cambodia does not have a group taxation, consolidation or group-relief regime; every Cambodian legal entity, including each subsidiary within a multinational group, is assessed and taxed as a separate taxpayer. Losses, credits and tax attributes cannot be transferred or pooled between related Cambodian entities. Group restructurings involving mergers or transfers of business between related Cambodian entities can, subject to Ministry of Economy and Finance approval, obtain limited relief from immediate taxation of unrealised gains, but this is discretionary and requires a specific ruling rather than being available as of right.

2.7 Controlled foreign companies

Cambodia does not operate a CFC regime attributing the undistributed profits of foreign subsidiaries to resident shareholders. Resident enterprises are taxed on their worldwide income, so profits of a Cambodian tax resident's foreign branch are directly includible, but a foreign subsidiary's profits are only taxed in Cambodia when actually distributed as a dividend to the Cambodian parent, subject to whatever withholding was applied abroad and any available foreign tax credit under domestic law or treaty.

2.8 Transfer pricing

Related-party transactions must be conducted on an arm's-length basis, benchmarked using methods consistent with the OECD Transfer Pricing Guidelines as adapted by Cambodian regulations. Taxpayers with related-party transactions are required to disclose them in an annex to the annual CIT return and, above prescribed thresholds, to prepare and maintain contemporaneous transfer-pricing documentation (local-file-style) demonstrating arm's-length pricing, to be produced to the GDT upon request within a statutory response period. Failure to maintain adequate documentation exposes the taxpayer to GDT-imposed pricing adjustments and penalties independent of whether an underpayment is ultimately established. Cambodia does not currently offer a formal advance pricing agreement programme.

2.9 Incentives

The Law on Investment 2021 offers Qualified Investment Projects a choice between (i) a corporate income tax exemption for a period determined by sector and location (comprising a trigger period, a fixed exemption period of up to several years, and a priority-period extension for specified activities, subject to an overall statutory cap) or (ii) a special depreciation allowance permitting accelerated write-off of the cost of new and used tangible property used in qualifying production or processing activities. QIPs also benefit from import duty and, for certain categories, VAT exemptions on construction materials, production equipment and production inputs, plus non-tax guarantees against nationalisation and price controls, and permission for up to 100% foreign ownership in most sectors. Special Economic Zones bundle these incentives with streamlined customs and one-stop administrative service.

2.10 Pillar Two

Cambodia has not enacted the OECD/G20 Pillar Two global minimum tax rules as of June 2026; there is no income inclusion rule, undertaxed profits rule or qualified domestic minimum top-up tax in the Cambodian tax code. Multinational groups with a Cambodian QIP benefiting from a tax holiday should nonetheless assess whether the ultimate parent's home-country income inclusion rule imposes a top-up charge on low-taxed Cambodian profits, since a holiday reducing the effective rate below 15% can shift revenue from the Cambodian treasury to the parent jurisdiction's tax authority without a Cambodian QDMTT to capture it locally; this dynamic is under policy discussion regionally but no legislative timeline has been announced.

2.11 Branch income and reorganisations

A foreign company's Cambodian branch or permanent establishment is taxed at the standard 20% rate (or the higher sector-specific rate where applicable) on its Cambodia-source income, computed under the same general rules as a resident company. Repatriation of after-tax branch profits is treated similarly to a dividend distribution for the additional profit tax true-up described in section 2.2 where underlying profits were not fully taxed. There is no comprehensive statutory reorganisation-relief regime comparable to Western merger-relief codes; mergers, demergers and asset transfers between Cambodian entities are in principle taxable events (triggering profit tax on unrealised gains and potentially registration tax/stamp duty) unless specific ministerial approval for tax-neutral treatment is obtained.

3.1 Residence and rates

An individual is resident if domiciled in Cambodia, has their principal place of abode in Cambodia, or is present in Cambodia for more than 182 days in a calendar year. Residents are taxed on Cambodian- and foreign-source salary and other income (subject to foreign tax credit relief); non-residents are taxed on Cambodian-source income only, generally via final withholding. Cambodia taxes employment income primarily through the Tax on Salary (ToS), a monthly withholding tax on cash and fringe-benefit remuneration at progressive rates rising from 0% on the lowest bracket through intermediate bands to a top marginal rate of 20% for the highest bracket of monthly taxable salary, with brackets denominated in Khmer riel and periodically adjusted. Non-resident employees are taxed at a flat rate (20%) on Cambodian-source salary.

3.2 Capital income and real estate

Cambodia does not have a comprehensive standalone capital gains tax regime for individuals outside the specific tax on income from the sale of immovable property and a small number of other categories; gains on movable property and securities held by individuals outside a business context have historically fallen outside routine assessment, though the tax administration has been extending withholding and reporting obligations to capital markets transactions as the Cambodia Securities Exchange develops. Rental income earned by individuals from immovable property is subject to a withholding tax on gross rental payments (currently 10% where paid by an enterprise, or self-assessed at the same effective rate where paid by an individual lessee), which is treated as a final tax in many cases. Transfers of immovable property are subject to a specific property transfer tax (commonly referred to as the tax on immovable property transfer) assessed on the higher of transaction value or the tax base determined by the tax administration.

3.3 Social security and payroll

Employers and employees contribute to the National Social Security Fund (NSSF), covering occupational risk, healthcare and a pension scheme, with contribution rates and wage ceilings set by NSSF regulation and shared between employer and employee (with the employer typically bearing the larger share for occupational-risk and healthcare schemes, and contributions being more evenly split for the pension scheme). Employers must withhold Tax on Salary monthly from employee remuneration and remit it to the GDT by the statutory deadline, together with a separate fringe-benefit tax borne by the employer on non-cash benefits provided to employees (such as certain housing, vehicles and other perquisites) at a flat rate. Annual salary tax reconciliation is not generally required from employees themselves, as the ToS is designed to operate as a final withholding tax collected through the employer.

3.4 Inbound individuals

Cambodia has no net wealth tax and no inheritance or gift tax as separate levies, though gifts and inheritances of certain registrable property (notably immovable property) can trigger registration tax on transfer. There is no dedicated inbound-expatriate tax regime offering reduced rates for foreign executives; expatriates are taxed under the same resident or non-resident rules as Cambodian nationals based on their presence and domicile, with foreign tax credit relief available under domestic law or applicable tax treaties for foreign-source income also taxed abroad. Cambodia's treaty network, while growing, remains more limited than regional peers, so many inbound assignees rely on domestic foreign tax credit provisions rather than treaty relief.

Cambodia applies withholding tax on a range of domestic and cross-border payments. Domestic withholding applies to payments by resident taxpayers to other residents for services, rental, interest and royalties, generally at 15%, while dividends between residents are treated per the distribution rules in section 2.2 rather than a separate withholding line. Payments to non-residents — dividends, interest, royalties, rental and management or technical service fees — are subject to withholding at a flat 14%, reduced under Cambodia's expanding but still limited tax treaty network, which currently reduces rates to a range typically between 7.5% and 10% for treaty-qualifying recipients with adequate beneficial-ownership and residency documentation. Interest paid to a Cambodian-licensed bank or financial institution is generally outside the scope of domestic withholding.

Treaty relief requires the non-resident recipient to hold a valid certificate of residence from its home tax authority and to substantiate beneficial ownership; absent such documentation, the payer must withhold at the higher domestic rate and the recipient must seek a refund. Withholding tax on payments to residents is generally creditable against the recipient's own annual profit tax liability, while withholding on payments to non-residents is typically a final tax.

5.1 General anti-abuse and hybrids

The Law on Taxation empowers the GDT to disregard or re-characterise transactions and arrangements that lack economic substance or are structured principally to obtain a tax advantage, operating as a general anti-avoidance backstop alongside the specific transfer-pricing, thin-capitalisation and related-party disclosure rules described in sections 2.3–2.8. Cambodia has not enacted a codified hybrid-mismatch regime addressing deduction/non-inclusion outcomes from hybrid instruments or entities; such issues are instead addressed, where they arise, through the ordinary income-characterisation and anti-avoidance framework applied by the GDT on audit.

5.2 Exit taxation and disclosure

Cambodia does not impose a dedicated exit tax on individuals or entities ceasing tax residence or migrating assets offshore; unrealised gains generally escape Cambodian tax until a realisation event occurs, subject to the general anti-avoidance rule where a pre-emigration restructuring is undertaken principally to avoid Cambodian tax on an otherwise imminent realisation. Cambodia participates in international exchange-of-information arrangements under its treaty network and has been expanding administrative cooperation with regional and international tax bodies, though it has not adopted an EU DAC6-style mandatory disclosure regime or a domestic country-by-country reporting filing obligation for Cambodian-headquartered multinational groups as of June 2026.

6.1 VAT

VAT is levied at a standard rate of 10% on the supply of most goods and services in Cambodia and on imports, with a 0% rate applying to qualifying exports of goods and certain services. Registration is mandatory for taxpayers above prescribed turnover thresholds (and for all medium and large taxpayers regardless of turnover), with a simplified regime for smaller businesses below the threshold. VAT returns are filed and paid monthly, with input VAT on qualifying business purchases creditable against output VAT, subject to documentation requirements and specific restrictions (for example, on passenger vehicles and entertainment expenses). QIPs may benefit from VAT exemption on imported production equipment, construction materials and production inputs during the incentive period.

6.2 Transaction, payroll and other taxes

A specific tax on certain merchandise and services (accommodation, telecommunications, certain vehicles, alcohol and tobacco) applies in addition to VAT at rates that vary by category. Registration tax (stamp-duty equivalent) applies to the transfer of immovable property and to the registration of certain legal documents and corporate transactions, typically at a percentage of transaction value. The property tax on immovable property is an annual tax on registered land and buildings above a value threshold, assessed at a modest flat rate on the excess over the threshold, administered separately from the profit tax system. There are no provincial or local income taxes, consistent with Cambodia's centralised national tax administration; patent tax (an annual business registration tax) is payable by all registered enterprises as a fixed or turnover-banded amount.

7.1 Filing, assessment and audit

The tax year is generally the calendar year, though enterprises may apply to align their tax year with a different 12-month accounting period subject to GDT approval. The annual profit tax return is due within three months of the end of the tax year, together with audited financial statements for medium and large taxpayers (audit being mandatory above prescribed size thresholds). Monthly tax returns (covering VAT, ToS, withholding tax, specific tax and other monthly obligations) are due by the 20th of the following month, with a monthly 1% prepayment of tax on income based on turnover also generally required (though see the minimum-tax proper-accounting-records exemption noted in section 1.2, which operates somewhat differently from the monthly prepayment mechanism and can create practical overlap requiring careful reconciliation). GDT audits are risk-based, ranging from desk reviews to comprehensive audits, and the statutory reassessment period is generally three years from the filing deadline, extended to ten years in cases of serious violation or non-filing.

7.2 Rulings, appeals and penalties

A taxpayer disputing an assessment may first lodge an administrative complaint with the GDT, and unresolved disputes proceed to the Tax Arbitration Committee (an independent body under the Ministry of Economy and Finance) and thereafter to the Cambodian courts. Cambodia does not operate a general binding advance-ruling programme, though taxpayers may seek informal written guidance from the GDT on specific technical questions, which carries persuasive but not fully binding weight in a later audit. Penalties for late filing or payment, understatement of tax, and failure to maintain required documentation range from a percentage surcharge on the tax shortfall to more severe penalties for serious or repeated violations, with monthly interest additionally accruing on unpaid tax from the due date.

Cambodia's monthly filing cadence across VAT, salary tax and withholding obligations makes the 20th-of-the-month deadline the single most important recurring compliance date for enterprises operating in the country; missing it triggers immediate penalty and interest exposure across multiple tax lines simultaneously.

9.1 Entity choice

The private limited company is the standard vehicle for both domestic and foreign investment, incorporated under the Law on Commercial Enterprises with a minimum of one shareholder and no general statutory minimum capital requirement outside regulated sectors (banking, insurance, and certain other licensed activities carry sector-specific minimums). Cambodia permits up to 100% foreign ownership in most sectors, particularly for QIPs, removing the need for local joint-venture partners in many industries. Branch offices of foreign companies are permitted and taxed on Cambodia-source income at standard rates; representative offices are more restricted and generally cannot generate local revenue. Taxpayer classification as small, medium or large — driven by turnover, legal form and QIP status — has a material effect on both the applicable rate schedule and the compliance burden, and should be assessed at the entity-design stage.

9.2 Structuring and incentives

Investors in manufacturing, agro-processing, infrastructure and other priority sectors should evaluate QIP registration with the Council for the Development of Cambodia at the outset, choosing between the tax-holiday and special-depreciation options based on projected profitability profile — capital-intensive projects with a long pre-profit ramp-up often prefer accelerated depreciation, while projects expecting early profitability often prefer the holiday. Given the absence of group relief, financing and shared-service arrangements between related Cambodian entities should be priced and documented on an arm's-length basis from inception to withstand GDT transfer-pricing review, and the interest-limitation carryforward mechanics in section 2.4 should be modelled explicitly for leveraged structures. Maintaining continuous, gap-free monthly filing compliance is a precondition for preserving both loss carryforwards (section 2.5) and any minimum-tax exemption based on proper accounting records (section 1.2).

9.3 Worked effective-rate illustration

A Cambodian manufacturing subsidiary classified as a large taxpayer (not a QIP) reports annual turnover of USD 10,000,000 and taxable profit of USD 900,000 for the year, having maintained proper accounting records throughout. Standard profit tax at 20% on taxable profit is 900,000 × 20% = USD 180,000. The minimum tax, calculated as 1% of turnover (USD 100,000), would ordinarily apply as a floor, but because the company maintained proper accounting records it qualifies for exemption from the minimum tax under the 2017 Law on Financial Management relief, so only the standard profit tax of USD 180,000 is due. The effective rate on taxable profit is 180,000 / 900,000 = 20%, equal to the headline rate. Had the company instead reported taxable profit of only USD 300,000 on the same USD 10,000,000 turnover without qualifying for the proper-accounting-records exemption, standard profit tax would be 300,000 × 20% = USD 60,000, while the minimum tax floor of USD 100,000 would exceed it — the company would then pay the higher minimum tax of USD 100,000, an effective rate of 100,000 / 300,000 = 33.3% on taxable profit, illustrating how the turnover-based minimum tax can materially increase the effective burden on lower-margin operations.

9.4 Compliance

Expect monthly filing across profit-tax prepayment, VAT, Tax on Salary and withholding tax, an annual profit tax return with mandatory audited financial statements above size thresholds, related-party disclosure annexed to the annual return, and transfer-pricing documentation above the thresholds in section 2.8. QIPs must maintain separate incentive-compliance records (investment amount, employment and export or domestic-market conditions) to preserve tax-holiday or special-depreciation eligibility and must report periodically to the Council for the Development of Cambodia in addition to routine GDT filings. Enterprises should track evolving GDT guidance on the proper-accounting-records standard for minimum-tax exemption, given the continued absence of a definitive published standard.