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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.


Most individuals living and working in Cambodia are aware that they have to pay tax on their salary. As the obligation to declare this rests with the employer, most individuals don’t give it much further thought.

But what about other forms of income, besides salary?

This publications answers the question.

How should individuals treat tax on capital gains?

Most individuals living and working in Cambodia are familiar with their obligations in relation to tax on salary or, if they work as consultants, duties in relation to withholding tax.

Fewer individuals are familiar with their obligations in relation to capital gains, a type of income realized when an asset (such as a house) increases in value through renovation (‘improvements’) or sale (‘disposal’). This, too, is a type of income, but is not subject to tax on salary as it does not arise from employment nor from the provision of goods or services.

The Law on Taxation provides that such profit realized should be taxed at the following rates:

Annual taxable profit USD Tax rate
From 0 Riel to 6,000,000 Riels $0 to $1,500 0%
From 6,000,001 Riels to 15,000,000 Riels $1,501 to $3,750 5%
From 15,000,001 Riels to 102,000,000 Riels $3751 to $25,500 10%
From 102,000,001 Riels to 150,000,000 Riels $25,501 to $37,500 15%
Greater than 150,000,000 Riels greater than $37,500 20%


For more information on taxation, please see our guide to business in Cambodia.

One of the most misunderstood fallacies amongst ex-pats living in Cambodia is the assumption that all Non-Government Organisation (NGO) employees are automatically granted a tax reprieve. Although there are some situations where NGO employees are exempt from Tax on Salary, this requires certain criteria to be met and an application to be processed and approved before NGO employees cease being liable for the tax.

Income Tax

One source of the misunderstanding stems from the fact that NGOs are usually exempt from income tax under Article 9 of the Law on Taxation, which deems organizations “organized and operated exclusively for religious, charitable, scientific, literary or educational purposes” exempt from income tax, provided that no part of the income is used for private benefits. If an NGO is granted income tax exemption under this heading, this exemption does not automatically flow on to employees. This was specifically confirmed in 1997 by Notice No 2672.

Diplomatic and Foreign Government Employees

Another basis for confusion arises from Article 43 of the Law on Taxation, which provides that “diplomatic and foreign officials” are exempt from paying tax on salary. The law goes on to detail that this is limited to those here representing their governments in official capacities or employees in Cambodia on behalf of official international organizations recognized under the Vienna Convention, such as the United Nations or the Red Cross.

The exemption

In 2001, the government considered the case for a salary exemption for NGO workers and issued Notice No 64 on Tax on Salary of NGO employees. The notice clarified the existing law and said that a salary tax exemption would be considered in relation to the following NGOs:

–          Those who implement projects on behalf of a foreign government (subject to agreement between both governments);

–          NGOs recognized by the United Nations;

–          NGOs that are self-sufficient, comply with Cambodian law and implement development and humanitarian projects in Cambodia;

–          NGOs that were granted a tax exemption in 1979;

–          NGOs with a small scope/budget of less than USD$50,000 a year; and

–          Employees who already pay salary tax in their own country.

Once these criteria are met, then the NGO in question must conclude a Memorandum of Understanding with the pertinent Ministry.

Such employees will not automatically receive an exemption, but must apply to the Ministry of Foreign Affairs and International Cooperation (MFAIC) or the Ministry of Economics and Finance (MEF), who will decide whether or not to grant the exemption.

Getting an exemption can be a complex and drawn out procedure. It is wise to assume nothing until the final stage, when a decision has been made by the MEF.

For more information, refer to our publication Labor Law Guide for NGOs

On Monday 28 February, the Ministry of Economy and Finance confirmed that the valuation system for the controversial property tax will be implemented by the end of March.

Taxpayers will have to register under the valuation system before the 30 September. But the legislation is still not clear on who is subject to the tax. The definition of taxpayer includes owners, occupiers and financial beneficiaries. How can a lessee avoid being liable for a tax the lessor has registered them for?

The law also causes problems for prospective purchasers of immoveable property who may find themselves liable for a year’s worth of tax on a property that they have only owned for a month. What systems are in place to prevent double taxation upon transfers of title?

As is usually the case there should be more clarity once the new tax starts to be implemented by the tax office.


The work of a handful of attorneys at BNG Legal, this blog's mission is to keep the world up-to-date on legal issues in the Kingdom of Cambodia.

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