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Opening a hotel or guesthouse in Cambodia involves a number of administrative steps. While it would be nice to simply find a suitable space and open one’s doors to paying guests, the reality is quite different.
Hotels and guesthouses (the difference is really one of size and nomenclature) are businesses like any other. That means that, while not strictly necessary, it is highly advisable that the owners establish a private limited company. Otherwise, they would be personally liable for the debts of the business. Like any company, you’ll also have to pay taxes – meaning obtaining a Patent Certificate and making periodic tax payments. Finally, you’ll need to obtain a hotel or guesthouse license from the Ministry of Tourism. This in turn requires a number preliminary approvals to check the sanitation and safety of the facilities. A fuller explanation of the procedures and applicable laws and regulations can be found in our recent report.
Failure to follow the proper procedure can lead to delays in opening and fines. Best to do it correctly from the start.
Properly setting up a company is only the beginning of its legal obligations. Once registered to operate, a business must follow periodically:
- Submit annual declarations to the relevant authorities
- Maintain proper accounting
- Pay taxes
- Renew licenses
- Authenticate corporate structural changes
Failure to do so can lead to fines, penalties, and trouble in selling or closing the business. For further information, please refer to our new report.
It’s no secret that tourism is a big part of the kingdom’s economy, and hopefully set to get much bigger.
This short publication outlines the steps needed for opening a travel agency – from registering at the Ministry of Commerce, to getting the proper license from the Ministry of Tourism, to filing with the Tax Department.
It’s not overly complicated, but doing it right the first time can save a lot of hassle down the road.
It’s a bad idea to operate an NGO, or even engage in activities normally performed by an NGO, without properly registering the legal entity. Fines, harassment, legal liability, and ultimately closure of the project are all possibilities for those who ignore the law. Needless to say, registering with the authorities must be at the top of the to-do-list for anyone looking to start an NGO in Cambodia.
A draft Law on NGOs and Associations has been in the works for some time now, and is rumored to be enacted by the end of this year. In the meantime, the status and procedures for registration of NGOs are governed by a handful of different laws and regulations.
The registration process differs for International NGOs and Local NGOs. An International NGO is essentially the local branch of a foreign organization – owned and directed by headquarters back in the home country. A Local NGO, on the other hand, is run predominantly by Cambodian citizens. While foreigners can be involved in the management and functioning of a Local NGO, the key figures – including the chairman, administrative officer and treasurer – must be Cambodian citizens.
International NGOs are registered through the Ministry of Foreign Affairs and International Cooperation (MFAIC), in conjunction with the ministries relevant to the NGO’s sector (Health, Environment, Social Affairs, etc.).
The MFAIC will require the following documents:
- Cover letter addressed to the MFAIC;
- Documents of registration for the NGO’s parent organization in the foreign country.
- Project plan and budget approved by the NGO’s board;
- A proxy letter from the Chairman of the Board appointing a local representative and giving them authority to sign a Memorandum of Understanding with the Cambodian government.
- A list of the foreign and local staff, stating their nationality, passport number, title, address in Cambodia, and their employment contracts;
- Office address in Cambodia, attached with a lease agreement for the office;
- A promise to provide a bank statement to MFAIC after signing of the Memorandum of Understanding.
- Passport and photos of the representative of the NGO
- Supporting letter from the relevant Ministry.
A Local NGO is registered through the Ministry of Interior (MOI), and unlike an International NGO, does not require additional approval from another Ministry. The MOI will require:
- Application form;
- NGO’s Memorandum and Article of Association (MAA), issued by MoI;
- Plan of NGO’s structure, signed by director, issued by MoI;
- Map of the NGO’s address, certified by the local Sangkat;
- Photos of office’s facade.
- Copies of the office’s lease agreement;
- Biographies of Cambodian director, administrator and financial officer with photos and copied ID cards;
- Approval letter issued by the local municipality.
Once all the documents are submitted, and unless the application presents unusual difficulties, it typically takes a few months to fully register. So long as they fully understand the correct procedures and official fees from the outset, there’s no reason an NGO couldn’t complete these steps themselves. However, experienced and trustworthy legal advisors can earn their fees by knowing exactly what steps to take, and which are unnecessary red-tape.
Strong economic growth, low startup costs, and a wealth of untapped markets make Cambodia an attractive environment for starting up a business. Many foreigners arriving with no intention of becoming an entrepreneur, find themselves opening their first business in this exciting marketplace.
Whether you are an experienced entrepreneur coming here to start another venture, or are transitioning to self-employment for the first time, properly establish your company in full compliance with the law is crucial. While many businesses operate informally, many more have been shut down or encounter ongoing problems from the authorities. Spending the time and money to do everything properly is the only way to avoid potentially insurmountable hassles in the future.
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So you’ve set up your company and you’re ready to go, right? WRONG!
If you set up a company in Cambodia, it is a legal requirement that your business is licensed with the relevant Ministries. Unfortunately, some licenses in Cambodia are expensive – but if you don’t get them, you could face a pretty hefty fine from the Ministry concerned – especially if you are a foreigner who is running the business.
Here is a brief look at what’s involved for licensing various businesses in Cambodia. It is important to note that these prices are just quotes from the Ministry that I have received and are used to give you a general idea of the costs involved. In Cambodia, prices can fluctuate and thus the price quoted to you may be somewhat different.
If you want to set up a restaurant in Cambodia you will need a variety of licenses from different government Ministries. Firstly, you need a license from the Ministry of Commerce – this is included when the company is set up (as an export / import license) so you do not need to worry about purchasing this additionally. Secondly, a license from the Ministry of Tourism is sometimes required. The fees for such a license can alter depending on the number of chairs you have in your restaurant. For example, if you have under 100, it will cost around $150. If you have over 300 chairs, it will cost over $300. You are then required to get letters issued from the Ministry of Health and the Fire Station. Application fees for these letters will set you back around $170 each. A location certificate is required too.
Agricultural Businesses also require licenses. The fee for this is around $4000. In order to set up the business you will need to supply a certificate of incorporation from the MOC, the Patent and VAT certificate, a lease certificate, a filled in application form and various other information. For your fee, you will receive a Business license that will set you up for running a variety of agricultural related businesses in Cambodia.
Import and Export businesses are easiest in relation to licenses as all companies incorporated through the MOC come with an inbuilt import / export license. However, some items that are imported or exported do require additional licenses such as medicines and other restricted goods. If you intend to import medicines into Cambodia, you will need to pay around $600 to the Ministry of Health for a license. The conditions for obtaining are license are difficult however – not only does the person obtaining the license need to have a pharmacy degree recognized by the Ministry of Health, they also must be a Cambodian national. Such licenses take about one month to obtain once all the correct documentation in provided.
Licenses are an inevitable cost of doing business – painful, but less painful than ignoring the law. See our publication on Establishing a Business for more info on licensing.