Cambodia Business Guides

Your Complete Guide to Starting and Growing a Business in Cambodia

Cambodia Business, Tax & Compliance Guide 2025

A comprehensive guide for entrepreneurs, investors, and professionals operating in Cambodia. This document provides authoritative insights on business formation, corporate governance, accounting, taxation, and compliance requirements.

1. Overview & Opportunities

Cambodia offers an increasingly attractive environment for both local and foreign businesses due to relatively low labor costs, improving infrastructure, and government incentives in key sectors. Businesses should be aware that legal and regulatory frameworks are evolving, requiring careful compliance and proactive planning.

Key sectors with growth potential:

  • Manufacturing and Processing: Apparel, electronics, and agro-processing benefit from cost advantages and government incentives.
  • Logistics & Trade: Infrastructure improvements support regional supply chains.
  • Tourism & Hospitality: Popular destinations and international arrivals create ongoing demand.
  • Agriculture & Agro-business: Abundant arable land supports production, processing, and export.
  • Special Economic Zones (SEZs): Offer tax holidays and other investment incentives.

2. Business Formation & Registration

Choosing the Right Business Structure

Cambodia provides several legal entities for domestic and foreign investors:

  • Private Limited Company (PLC): Suitable for most SMEs, requires at least one director and one shareholder.
  • Public Limited Company: Designed for larger businesses intending to raise capital publicly.
  • Branch Office: Allows foreign companies to conduct commercial activities under the parent company’s name.
  • Representative Office: Suitable for market exploration without engaging in direct sales or profit-making.

Minimum Capital and Ownership Requirements

  • Private Limited Company: Minimum capital of KHR 4,000,000 (approx. USD 1,000).
  • Certain sectors (banking, insurance, real estate) require higher capital thresholds.
  • Foreign investors can generally hold up to 100% ownership, subject to Ministry of Commerce (MoC) and Council for the Development of Cambodia (CDC) restrictions.

Corporate Bank Account

Required documentation for account opening includes:

  • Certificate of Incorporation
  • Memorandum and Articles of Association
  • Company stamp
  • Valid business license
  • Identification of directors and shareholders

Corporate accounts are essential for transparent financial management, tax compliance, and operational efficiency.

Branch & Representative Offices

  • Branch Office: Can engage in commercial activities and generate revenue. Registration with MoC and the General Department of Taxation (GDT) is mandatory.
  • Representative Office: Conducts research, marketing, and liaison activities but cannot earn revenue. Ideal for market assessment before full investment.

3. Corporate Governance & Compliance

Director Roles and Responsibilities

Directors are legally accountable for ensuring that the company:

  • Complies with the Law on Commercial Enterprises (LCE) and other regulations.
  • Maintains accurate financial records.
  • Fulfills all tax and reporting obligations.
  • Acts in the best interest of the company and its shareholders.
  • Avoids fraudulent or unlawful activities.

Directors may face personal liability for serious breaches of duty.

Annual Filings and Renewals

Companies must complete:

  • Annual Declaration of Commercial Enterprise (ADCE) with MoC
  • Patent Tax and Business License renewals with GDT
  • Annual financial statements and updates to shareholder/director information

Timely compliance prevents fines and suspension of registration.

Accounting and Audit Obligations

  • Maintain proper accounting records in accordance with Cambodian International Financial Reporting Standards (CIFRS) or CIFRS for SMEs.
  • Companies meeting size or revenue thresholds require independent audits by licensed audit firms registered with the Accounting and Auditing Regulator (ACAR).

Corporate Recordkeeping

Maintain organized records including:

  • Memorandum and Articles of Association
  • Shareholder and director registers
  • Meeting minutes and resolutions
  • Financial statements and supporting documents

Records must be available at the registered office for inspection by authorities.

4. Accounting & Taxation

Overview of Cambodia’s Tax System

Managed by GDT under the Law on Taxation, Cambodia operates a self-assessment regime. Key taxes include:

  • Corporate Income Tax (CIT)
  • Personal Income Tax (PIT) / Tax on Salary
  • Value Added Tax (VAT)
  • Withholding Tax (WHT)
  • Patent Tax and Minimum Tax

Corporate Income Tax (CIT)

  • Standard rate: 20% of taxable profit
  • Higher rates may apply for specific sectors (oil, gas, natural resources)
  • Exemptions available for CDC-approved investment projects
  • Monthly prepayments and annual filings required

Personal Income Tax (PIT)

Employees and individuals earning income in Cambodia are subject to Personal Income Tax, also known as Tax on Salary.

  • Employers must withhold and remit PIT on behalf of their employees each month.
  • Tax rates are progressive, ranging from 0% to 20% depending on income level.
  • Fringe benefits, bonuses, and allowances may also be taxable.

CBS Cambodia assists employers in calculating and filing salary tax correctly, ensuring full compliance with labor and tax laws.

Value Added Tax (VAT)

  • Standard rate: 10%
  • Apply output VAT on sales, claim input VAT on eligible purchases
  • Certain exports and investment activities may qualify for 0% VAT or exemptions
  • Monthly VAT filings required

Withholding Tax (WHT) & Double Taxation Agreements (DTA)

  • WHT applies to payments such as service fees, rent, royalties, interest
  • Rates vary: 4%–15% depending on payment type and residency
  • Cambodia has DTAs with multiple countries to prevent double taxation

Tax Planning & Compliance Tips

  • Maintain accurate accounting records
  • File monthly and annual tax returns on time
  • Reconcile financial statements with tax declarations
  • Keep supporting documentation
  • Seek professional advice on exemptions, incentives, and cross-border transactions

Year-End Closing & Financial Reporting

  • Review ledgers and adjust accounts
  • Verify inventory and fixed assets
  • Prepare profit & loss and balance sheet statements
  • Submit annual income tax returns and financial reports

5. Payroll & Employment Tax

Payroll Tax Calculation & Filing

  • Calculate gross salary, allowances, benefits
  • Apply progressive tax rates (0%–20%)
  • Submit monthly salary tax returns to GDT by the 25th of each month

National Social Security Fund (NSSF)

  • Employers must register all employees within three days of hiring
  • Contributions cover occupational risk, healthcare, and pensions
  • Monthly filings are mandatory

Employee Benefits & Labor Compliance

  • Minimum wage, overtime, paid leave, public holidays
  • Severance pay and termination procedures
  • Employment contracts and HR documentation

Expatriate Employee Taxation

  • Tax on Salary withheld monthly
  • Registration with NSSF (if applicable)
  • Valid work permits and employment contracts required

6. Special Topics & Incentives

SME & Investment Incentives

  • Tax holidays, profit tax exemptions
  • Import duty exemptions on machinery and equipment
  • Accelerated depreciation for approved CDC projects

Digital Services Tax

  • VAT applies to digital services provided to Cambodian customers
  • Foreign digital businesses must register for VAT and file monthly

Import & Export Duties

  • Customs duties: 0%–35%
  • VAT on imports: 10%
  • Special taxes for specific products

E-Commerce Compliance

  • Registration with MoC and GDT required
  • Charge VAT on sales, report income, and maintain electronic records

7. Practical Steps to Start a Business in Cambodia

  1. Conduct market research and refine the business idea
  2. Select the appropriate business structure
  3. Reserve company name with MoC
  4. Prepare incorporation documents (Articles of Association, etc.)
  5. Register with MoC and obtain Certificate of Incorporation
  6. Register for tax with GDT (TIN, VAT if required)
  7. Register with Ministry of Labour (MLVT) and NSSF
  8. Set up accounting and compliance systems
  9. Apply for work permits and visas for foreign employees
  10. Maintain ongoing corporate, tax, and labor compliance

8. Latest Tax & Compliance Updates (2025)

  • Minimum Tax & Prepayment Tax: 1% of turnover, unless exempted
  • VAT registration threshold: KHR 125 million per quarter
  • Foreign-owned company compliance: Annual financial statements, withholding taxes, and transfer pricing documentation
  • Payroll & NSSF reporting: Monthly submissions mandatory for all businesses

9. Key Resources & Contacts

This guide is intended for informational purposes and does not constitute legal, tax, or accounting advice. Businesses should consult professional advisors to ensure compliance with current Cambodian laws and regulations. For professional guidance, please contact Competency Business Solutions.

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