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Corporate income tax in Cambodia
29/11/2022
Corporate Income Tax (CIT) is a direct tax imposed on companies that undertake business in Cambodia. Companies that operate a business outside of Cambodia but derive income from Cambodia are also subject to this tax.
Companies that are subject to Corporate Income Tax have certain requirements and deadlines that they must meet in order to stay fully compliant with Cambodian tax laws.
In this article, we will explore how Corporate Income Tax affects companies in Cambodia.
What is corporate income tax?
Corporate income tax is the tax that is deducted from any income that a company made.
In Cambodia, the rate of Corporate income tax differs based on the size of a company and its residency.
Generally, the CIT is 20%
Rate of Corporate income tax in Cambodia
Corporate income tax rates in Cambodia range from 0% to 20%.
In Cambodia, the following rates of corporate income tax rate applies:
- medium and large taxpayers are subject to a CIT rate of 20%.
- small taxpayers are subject to a CIT rate of between 0% to 20%.
What are small, medium, and large companies?
Small companies
Small companies in Cambodia consist of sole proprietorships and partnerships and can be defined by the following criteria:
- Annual turnover of KHR 250 million (60,000 USD) to KHR 700 million (167,000 USD)
- Total turnover for any three consecutive months in the calendar year from KHR 60 million (14,000 USD)
- Total expected turnover for the next three consecutive months from KHR 60 million (14,000 USD)
- Participating in bidding, price consultation, or surveys for the supply of goods or services
Medium companies
Medium companies are defined as:
- Annual turnover of KHR 700 million (167,000 USD) to KHR 4,000 million (955,000 USD)
- Registered as a legal person or representative office
- National or sub-national state institutions, associations and non-government organisations
- Foreign diplomatic and consular missions, international organisations and technical cooperation agencies of other governments
Large companies
Large companies can be defined as:
- Annual turnover of more than KHR 4,000 million (955,000 USD)
- A subsidiary of a multi-national company or branch of a foreign company
- Qualified Investment Projects (QIP)
- The following activities are not allowed to apply for QIPs:
- Commercial activities, import and export and transportation service
- Services touristiques
- Entertainment services
- Casino and gambling business
- Monnaie et services financiers
- Activities related to newspapers and media
- Professional services
- Production and processing of wood products
- Production of tobacco products
- Développement immobilier
Additional corporate income tax rates
While the above is the most common type of CIT, there are additional income taxes that can be applied in certain scenarios. For example:
- Oil or natural gas production or natural resources (timber, ore, gold and precious stones) exploitation are subject to a CIT rate of 30%.
- General insurance, reinsurance or small-scale enterprises, including property, liability and health insurance are subject to a CIT rate of 5% (gross premium income)
- Life insurance or reinsurance companies, including life, endowment and annuity insurance are subject to a CIT rate of 20%
Who is considered a resident taxpayer in Cambodia?
A resident taxpayer is defined as a company that is organised or managed in Cambodia or has Cambodia as its principal place of business.
Who would be considered a non-resident taxpayer?
A non-resident taxpayer is a person or entity who would be considered to have a permanent establishment in Cambodia if there is:
- a fixed place of business,
- a branch of a foreign company which the non-resident person carries on their business also includes online such as e-commerce activities,
- if the goods or services are supplied or used in Cambodia and
- the business activities (including heavy equipment operations) for one or more exploration or business of natural resources for a total of more than 90 days at a time or more in any 12 months period.
CIT on worldwide and Cambodia-sourced income?
Resident taxpayers of Cambodia are subject to tax on worldwide income. Non-resident taxpayers and branches are only taxed on income sourced within Cambodia.
What is the Cambodian year of assessment?
The year of assessment (YA) for companies in Cambodia operates as a calendar year i.e. from the 1st of January to the 31st of December.
When are corporate income tax returns due in Cambodia?
CIT tax returns must be filed and submitted within three months after the tax year-end.
It is important for companies to note that corporate income tax or minimum tax liability can be reduced by prepayment of corporate income tax payments.
Any monthly CIT returns must be filed by the 20th of the following month. If the 20th happens to fall on a weekend or a public holiday, the deadline will be extended to the next working day.
Prepayment of CIT
The prepayment of CIT is equivalent to 1% of the company’s turnover in the previous month. This is a mandatory monthly payment.
Should the taxpayer be in the tax holiday period, they will also be exempted from the prepayment obligation, but a nil monthly return must be submitted.
What is minimum tax?
The minimum tax is a separate deduction from the CIT and is imposed at a rate of 1% on annual turnovers. Should the CIT be less than the minimum tax, then the company is obligated to pay the minimum tax.
It is important to note that the prepayment paid for the year will be equal to the minimum tax of the company.
If the CIT paid is lower than the prepayment of CIT payments, then no refund will be owed to the taxpayer as the prepayment of CIT will be used to offset the minimum tax obligations.
Companies that maintain proper accounting records are exempted from the minimum tax.
The criteria determined for maintaining proper accounting records and procedures of the minimum tax is set out in the Prakas of the Ministry of Economic and Finance.
Tax incentives available in Cambodia
The Ministry of Economy and Finance (MEF) issued Prakas No. 159 Prk established the implementation of tax incentives for small and medium-sized enterprises (SMEs).
| Company size | Annual turnover (USD) | Number of employees |
| Small sized | 62,500 – 175,000 | 10-50 |
| Medium sized | 175,001 – 1 million |
51-100 |
Which SMEs that are entitled to tax incentives?
The following SMEs are eligible for tax incentives?
- Agricultural or agro-industrial products
- Food production and processing
- Manufacturers producing domestic consumers goods, waste recycling and produce goods for the tourism sector
- Research and development involving information technology (IT), including services for management through IT systems which are innovative
- Enterprises located the SME cluster zones and enterprises developing the cluster zone
What tax incentives are available for SMEs?
The following tax incentives are available for SMEs in Cambodia:
- A three-year tax on income exemption from the registration date for new companies or for existing companies; or
- A five-year tax on income exemption from the registration date for new companies or for existing companies, if the companies meet any of the following conditions:
- The company uses at least 60% of local raw materials
- The company increases its staff by 20%
- The company is in the SME cluster
- The tax incentives may be withdrawn under the following circumstances.
Can tax incentives be withdrawn?
If a company does any of the following, the tax incentives granted to the company can be withdrawn.
- failure to comply with the tax obligations
- the company changes its business activity
- the company changes address or owner without notifying the tax administration
Are there any deductibles in Cambodia?
In Cambodia, the property is depreciated at specific rates if the property is used for business purposes.
Property depreciation is classified into four classes, and the straight-line or declining balance method is applied to each class of property.
Intangible property:
| Intellectuelles | Rate | Method |
| Have specific useful life | Based on useful life | Straight-line |
| No specific useful life | 10% |
Straight-line |
Tangible property:
| Intellectuelles | Rate | Method |
| Class 1: Building and structure | 5% & 10% | Straight-line |
| Class 2: Computers, electronic information systems, software and data handling equipment | 50% |
Declining balance |
| Class 3: Automobiles, trucks, office furniture and equipment | 25% | Declining balance |
| Class 4: All other tangible property | 20% |
Declining balance |
Long-term agriculture:
Rubber crops can claim depreciation for 20 years at the following rate:
| Beneficial year | Depreciation Rate |
| 1st and 2nd year | 3% |
| 3rd and 4th year | 4% |
| 5th to 10th year | 5% |
| 11th and 12th year | 7% |
| 13th to 15th year | 6% |
| 16th to 19th year | 5% |
| 20th year | Remaining balance |
Other crops apart from rubber: should be calculated by the straight-line method based on beneficial life of the productivity or 5% per year whichever is shorter.
Animal husbandry: should be calculated by the straight-line method based on the beneficial life of the productivity or 10% per year whichever is shorter.
Are there any non-deductible expenses available in Cambodia?
The following non-deductible expenses are available in Cambodia include
- Accounting depreciation
- Donations, grants or subsidies
- Extravagant and/or unrelated business expenses
- Expenses on activities considered to be recreation or entertainment
- Increase in provisions
- Loss on sales or exchange of property, directly or indirectly, between related parties
- Non-deductible tax expenses (ie withholding tax, salary tax)
- Loss on the disposal of fixed assets as per accounting record
- Penalties, additional tax and late payment interest imposed for violation of the 1997 Law of Taxation
- Salary unpaid within 180 days of the next year
- Expense with related parties unpaid within 180 days of the next year
- Other non-deductible expense
If you need more information about starting a business in Cambodia, you can talk directly with one of our experts.
To learn more about CIT in Cambodia, why not take a look at our CIT services?
Please note that this article is for information purposes only and does not constitute legal advice.
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