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Qualified Investment Projects (QIPs) in Cambodia
There is no doubt that Cambodia is emerging as a promising land for businesses looking to capitalise on the exponential growth of the Southeast Asian economy. With strong GDP growth, increasing foreign direct investment and a solid plan to transition to a digital economy, Cambodia is setting itself up to become an attractive new business hub in the region.
Cambodia has developed business structures specifically designed for foreign investment that bring significant advantages to companies. One such example is the Qualified Investment Project (QIP), which is a great option for foreign companies to consider.
What is a Qualified Investment Project (QIP)?
Qualified Investment Projects are an investment scheme offered by the Council of the Development of Cambodia (CDC) in an effort to boost foreign direct investment in the country.
QIPs are a popular choice alongside other traditional structuring options, such Limited Companies, Branch and Representative Offices.
The core of this investment scheme is a special tax holiday or special tax depreciation, as chosen by the company.
Companies qualifying as QIPs can indeed benefit from a tax exemption on profits in the form of a tax holiday of up to 9 years.
QIPs can also opt for a special depreciation of 40% on tangible assets used in production.
Please note that some activities, such as casinos, bars or massage parlours are not eligible to apply for QIPs.
Other QIP benefits
When considering applying for a QIP, there are a number of other benefits that, in combination with the main tax benefits, could outweigh other structuring options.
These include duty-free importation of machinery or capital goods, no restrictions on the hiring of foreign employees, and the ability to enter into unlimited land leases.
Last but not least, QIPs can avoid paying VAT on imported inputs provided their project is located in a special economic zone (there are currently 22 SEZs in Cambodia with billions of dollars invested and hundreds of international investment projects).
How to apply for a QIP
Applying for a QIP in Cambodia is a simple three-step process that involves:
- submitting an investment proposal to the relevant authorities (CDC),
- applying for all required licences and permits and;
- the issuance of a “Final Registration Certificate” (FRC).
Timeline : at least three months
In conclusion
QIPs are an important asset for both the Cambodian business landscape and for companies wishing to enter the country. They are one of the most powerful business tools put in place by the government to date to encourage FDI and foreign companies can benefit greatly from them.
To find out more about QIPs and how our experts can help you, please check out our practice page.
To Learn more about starting a business in Cambodia, why not take a look at our market entry services. Additionally, you can book a consultation with one of our experts.
Please note that this article is for information purposes only and does not constitute legal advice.
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