Phnom Penh GMT +7
EY
5th Floor, Emerald Building
#64 Norodom Boulevard corner Street 178 Sangkat Chey Chumneah, Khan Daun Penh Phnom Penh Cambodia
Executive and immigration contacts
Robert M. King +84 (8) 3824-5252 (resident in Ho Chi Minh, Vietnam) Fax: +84 (8) 3824-5250 Email: robert.m.king@vn.ey.com
Reangsey Touch +855 (23) 860-450 Fax: +855 (23) 217-805 Email: reangsey.touch@kh.ey.com
A. Income tax
Who is liable. Cambodian resident and nonresident individuals are subject to Tax on Salary (ToS) on income from their employment activities and withholding tax on certain types of income. Resident individuals are subject to ToS on their worldwide employment income, while nonresident individuals are subject to tax on their Cambodian-source employment income only. For withholding tax rates, see the sections below.
For tax purposes, an individual is considered to be a resident if he or she has his or her residence or his or her principal place of abode in Cambodia or if he or she is present in Cambodia for more than 182 days in any period of 12 months ending in the current tax year.
Income subject to tax Employment income. The taxation of the various types of employ ment income is described below.
ToS applies to employment income, which includes salary, remu neration, wages, bonus, overtime compensation and fringe bene fits. Salary from employment activities advances and loans are taxable, except as provided below. However, taxable salary consists of all payments in cash or in kind except payments classified as fringe benefits. Fringe benefits are subject to a separate tax regime called the Tax on Fringe Benefits (ToFB; see Tax on Fringe Benefits).
Salary and fringe benefits received in foreign currency are con verted to Cambodian riel in calculating taxable income.
The following categories of employment income are exempt from tax:
• Reimbursement of employment-related expenses
• Indemnity for a layoff within the limit provided in the Labor Law
• Additional remuneration with social characteristics as indicated in the Labor Law
progressive
diem
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National Assembly and Senate, and
and international aid organi
investment income. The following table pro
realized by individuals and
of pass-through entities that are
no procedure exists for individuals to report income tax on their income. As a result, the tax authority does not collect income tax based on the above table. Tax on individuals’ income is collected only through withholding tax.
tax is imposed on resident individuals at the follow ing rates:
Services (except payments to a real regime taxpayer with a valid value-added tax [VAT] invoice or payments less than KHR50,000): 15%
Royalties (except payments to a real regime taxpayer with a VAT invoice for shrink-wrap software, site license, download able software and software bundled with computer hardware): 15%
• Interest income: 4% (non-fixed term deposits at domestic banks), 6% (fixed term deposits at domestic banks) and 15% (paid by resident taxpayers except domestic banks)
Rental income: 10% (except payments to real regime taxpayer with a valid VAT invoice)
Withholding tax at a rate of 14% applies to all payments of Cambodian-source income by a resident or permanent establish ment of a nonresident to a nonresident (except premiums with respect to the reinsurance of property or other risks in Cambodia).
Capital gains. Effective from 1 January 2022, capital gains are taxed at a flat rate of 20% on capital gains. Capital gains refer to taxable income resulting from the revenue received from the sale or transfer of capital less allowable expenses. Capital gains tax is applicable to resident physical persons and nonresident taxpay ers, which can be a physical person or a legal entity.
Deductions. An allowance for a spouse and minor dependent children in the amount of KHR150,000 per person per month is deductible from taxable salary.
Rates. The employer must withhold ToS from Cambodian resi dents. ToS is imposed at progressive rates ranging from 0% to 20%. A flat rate of 20% applies to nonresidents. The following
presents
Monthly taxable salary
monthly taxable salary
Not exceeding Rate
Tax on Fringe Benefits. The Tax on Fringe Benefits (ToFB) is imposed on taxable fringe benefits provided by an employer in cash or in kind, including the providing of, among other items, private use of vehicles, accommodation, food, utilities, household personnel, low-interest loans, discounted sales, educational assis tance (except for employment-related training), insurance premiums and pension contributions in excess of the levels provided by the Labor Law.
The ToFB is borne by the beneficiary. Fringe benefits are taxable at a rate of 20% of the total value of the benefit provided. In determining the tax payable, the tax base equals the fair market value of the fringe benefit and any other applicable taxes.
Effective from 6 October 2016, the following allowances received by employees and workers for the performance of their employment activities are not subject to ToFB:
• Travel allowances from home to workplace or factory and from workplace or factory to home, and provision of accommodation or a dormitory in the factory in accordance with the Labor Law
• Food allowances provided to all employees and workers regard less of job classification and function (including overtime meals)
• Contributions to the Social Security Fund within the limit pro vided under the law (see Section C)
• Life and health insurance premiums provided to all employees regardless of job classification and function
Infant allowances or nursery expenses as stipulated in the Labor Law
• Severance pay for the termination of a contract or indemnity for a layoff within the limit of the Labor Law
However, to claim the above exemptions, the employer must inform the tax authority about its allowance policy.
B. Other taxes
Net worth, gift, inheritance and estate taxes are not imposed in Cambodia.
C. Social security
The two types of social security schemes in Cambodia are pen sion and occupational risks. The contribution for the occupa tional risks scheme consists of an occupational risk contribution (ORC) and a health care contribution (HCC). The occupational risks scheme is currently being applied. However, the pension scheme has not yet been implemented.
The ORC covers work-related accidents, accidents commuting between home and the workplace and other occupational diseases. The HCC covers health problems. All employers must register with the National Social Security Fund and make an ORC of 0.8% and HCC of 2.6% of the monthly average wages of the employees. The monthly average wage per employee is capped at KHR1,200,000 per month. As a result, the maximum ORC per employee is approximately KHR9,600 (0.8% of KHR1,200,000), and the HCC per employee is approximately KHR31,200 (2.6% of KHR1,200,000).
The ORC and HCC are not refundable.
D. Tax filing and payment procedures
Employees and other individuals are not required to file ToS and withholding tax returns with the tax authority. Employers and withholding agents must withhold ToS and other income taxes from employees and other individuals before making payments. They must file monthly ToS and withholding tax returns and remit the taxes to the tax authority on behalf of employees and other individuals.
If an employer resides outside Cambodia, it can appoint a fiscal representative (a local registered company) in Cambodia to be in charge of withholding the ToS (before making the salary payment to employees) and remitting the ToS to the Cambodian tax authority on its behalf. If no withholding of the ToS is made, the fiscal representative appointed by the foreign employer is held responsible under Cambodian law.
Effective from January 2021, the ToS and withholding tax return must be filed and the amount of tax must be paid to the tax authority through the tax authority’s e-filing system by the 25th of the following month.
Cambodia does not require the filing of an annual ToS or per sonal income tax return.
E. Double tax relief and tax treaties
Relief for foreign taxes. A resident person who receives foreignsource salary and who pays taxes according to the foreign tax law receives a tax credit against the ToS if supporting documents are available.
Tax treaties. To date, Cambodia has entered into tax treaties with Brunei Darussalam, China Mainland, the Hong Kong Special Administrative Region (SAR), Indonesia, Malaysia, Singapore, Thailand and Vietnam. In addition, Cambodia has signed a tax treaty with Korea (South), but this treaty is not yet in force.
F. Entry visas
Foreign nationals of most countries must obtain valid entry visas to enter Cambodia. However, this requirement does not apply to nationals of the member countries of the Association of South east Asian Nations (ASEAN) such as Brunei Darussalam, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
Cambodia has several types of entry visas, including business (Category E), tourism (Category T) and diplomatic missions (Category A). The duration of a single-entry business visa depends on the nationality of the employee.
Nationals of ASEAN countries may obtain an immigration stamp on arrival. This immigration stamp is valid for 14, 21 or 30 days, depending on the nationality of the employee.
To work in Cambodia, foreign nationals must obtain a multipleentry business visa. Depending on an employee’s nationality, visas may be obtained from the Cambodian embassy in the home country or from an Immigration Department office on arrival in Cambodia.
The following documents are required to be submitted to obtain a visa:
• A copy of the application form
• Original passport with a validity of at least six months
• A copy of the employment contract or offer letter
• Three photographs (4 cm x 6 cm)
• Duty fee
After an individual receives a single-entry business visa to Cambodia, he or she can obtain a multiple-entry business visa or an extension of temporary residency permission for up to 12 months from the Immigration Department of the Ministry of Interior. The following documents are required:
• Original passport with a validity of at least six months
• One photograph (4 cm x 6 cm)
• Supporting documents for residence application that are valid for a minimum of six months (rental contract, employment contract and business license of employer from Ministry of Commerce)
• Duty fee
• Certificate of non-criminal record issued by competent authority of the country of origin
• A copy of the employment contract
• A certified slip for guaranteeing all travel cost with the National Bank of Cambodia, amounting to KHR1,250,000 (approximately USD313)
• Physical presentation of assignee at the Immigration Department of the National Police of the Ministry of Interior
• A health-check certificate issued by a medical doctor of the country of origin (the certified date on the certificate may not be more than three months before the date of submission of the application)
• Work permit (in the case of an extension)
COVID-19 measures. As a result of the COVID-19 pandemic, Cambodia has temporarily stopped providing the business or Type E visa on arrival. Consequently, an assignee or foreign employee can only apply for a business visa at the Cambodian embassy or consulate in his or her home country before coming to Cambodia.
In addition, an assignee or foreign employee is required to have a medical certificate indicating a negative test for COVID-19 that was issued by the competent authorities of his or her home
country no more than 72 hours before the date of travel, and the assignee or foreign employee may be quarantined for 14 days in Cambodia.
The assignee or foreign employee is also required to have a Validation Certificate on Payment Guarantee (CPG) or Validation Certificate of Invitation (CI), which is issued and approved by the Royal Government of Cambodia (RGC). These certificates must be requested on specific RGC websites by the chief executive officer or a shareholder of the company or director of the busi ness association or federation, investment owner in the specialeconomic zone, or other person for which the assignee or foreign employee is working. After checking on the validity of the guar antee or invitation, which will take one or two days, the RGC issues the CPG or CI for the assignee or foreign employee to attach to the visa.
At the time of writing, the RGC had temporarily suspended the sponsorship mechanism for issuing the CPG or CI. However, the CPG and CI signed by the employer are currently required from the Cambodian embassy or consulate following their template. Moreover, the assignee or the foreign employee is required to buy health insurance of USD90 in Cambodia with a validity of 20 days. In addition, he or she is required to have a security deposit of USD2,000 for accommodation, transportation and other expenses during quarantine if any fellow travelers test positive for COVID-19.
G. Work permits
All foreign nationals who wish to work in Cambodia must obtain work permits from the Cambodian Ministry of Labor. To be eli gible for a work permit, a foreigner must have a business visa.
An employer who has established an office and registered with the Ministry of Labor in Cambodia is responsible for processing an application for the employee’s work permit. Work permits normally have an initial duration of one year.
The two types of work permits are the temporary work permit and the permanent work permit.
Temporary work permit. Temporary work permits are issued to the following foreigners:
• Staff and management specialists
• Technical staff
• Skilled workers
• Service providers or other laborers
The application for a temporary work permit must be submitted online to the Ministry of Labor with the following required items:
• Passports or an equivalent document with proper visa
• A photograph (4 cm x 6 cm), taken in the front without hat and glasses
• Medical certificate of employee obtained from the Cambodian Medical Department of the Ministry of Labor
• Certified employment contract
• Residency letter
• Annual tax fees for temporary work permit
Permanent work permits. Permanent work permits are issued to the following foreigners:
• Foreign immigrants recognized by the Ministry of Interior
• Foreign investors, spouses and dependents recognized by the Council for the Development of Cambodia
Applications for permanent work permits must be sent to the Ministry of Labor with the following required documents and information:
• Application form
• Resident card or equivalent documents recognizing the indi vidual as an immigrant or investor
• Passport or any equivalent documents with proper visas
• Medical certificate of employee obtained from the Cambodian Medical Department of the Ministry of Labor
• Three photographs (4 cm x 6 cm), taken from the front without hat and glasses
• Annual tax fees for permanent work permit
It takes one to three months to obtain an approval for a work permit.
A work permit must be renewed every 12 months before its expi ration. Before March of each year, an application to renew the work permit must be submitted to the Ministry of Labor together with the updated documents regarding the initial work permit submission.
H. Residence permits
Any person who does not have Cambodian nationality is consid ered to be alien. Aliens may obtain resident cards from the Ministry of Interior. The two types of resident cards for aliens are temporary and permanent.
Temporary resident cards. Temporary resident cards are valid for a period of two years and can be extended every two years. Temporary resident cards are issued for employees performing managerial, technical or specialized services.
The following documents must be submitted to obtain temporary resident cards:
• An application form for a temporary resident card
• Three copies of information slip form
• A copy of passport or any other equivalent document with proper visa
• Three photographs (4 cm x 6 cm)
• A copy of medical certificate from a doctor from the home country
• A copy of a written labor contract
• A copy of social security insurance
• A copy of the receipt of payment of temporary resident card tax
Permanent resident cards. Permanent resident cards are issued to foreign investors and their household members who have authorization to invest in Cambodia from the Council for the Development of Cambodia and to other individuals who are rec ognized by the Ministry of Interior.
The following documents must be submitted to obtain a perma nent resident card:
• An application form for a permanent resident card
• A copy of the Proclamation recognizing the alien as an immi grant alien who is a private investor
• A copy of passport or any other equivalent document with proper visa
• Three photographs (4 cm x 6 cm)
• A certificate from a Cambodian bank that evidences the deposit of a bond required by the Anukret (sub-decree)
• A copy of the receipt of payment of permanent resident card tax
I. Family and personal considerations
Family members. The spouse and dependents of a work permit holder must apply for a single-entry business visa and then multiple-entry business visas, which would enable them to live in Cambodia.
For family members who have a CPG or CI, see the discussion of the COVID-19 pandemic requirements in COVID-19 measures in Section F. Family members who do not have a CPG or CI are required to buy health insurance of USD90 in Cambodia with a validity of 20 days. In addition, they are required to have a secu rity deposit of USD2,000 for accommodation, transportation and other expenses during quarantine if any fellow travelers test positive for COVID-19.
Forced heirship. No forced heirship rules apply in Cambodia. Driver’s licenses. Drivers must have a Cambodian driver’s license. Some foreign nationals may be able to use their valid homecountry driver’s licenses to apply for a Cambodian driver’s license.