Cambodia Personal Income Tax

Personal income tax is not imposed in Cambodia. However, 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 employ­ment income is described below.

ToS applies to employment income, which includes salary, remu­neration, wages, bonus, overtime, compensation and fringe bene­fits. 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 con­verted 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
  • Flat allowance for mission and travel expenses (per diem for field work done by employees)
  • Allowances for special uniforms or professional equipment
  • Salaries of members of the National Assembly and Senate, and employees of approved diplomatic and international aid organi­zations

Self-employment and investment income. The following table pro­vides the progressive tax rates for profits realized by individuals and for distributive shares of members of pass-through entities that are not classified as legal persons.

Annual taxable profit

Exceeding
KHR
Not exceeding KHR Rate

%

0 6,000,000 0
6,000,000 15,000,000 5
15,000,000 102,000,000 10
102,000,000 150,000,000 15
150,000,000 20

 

However, in practice, no mechanism exists for the taxation of individuals based on the above table.

Withholding tax is imposed on resident individuals at the follow­ing rates:

  • Royalties and services: 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 banks)
  • Rental income: 10%

Withholding tax is imposed on nonresident individuals at a rate of 14% on the following types of income:

  • Dividends
  • Interest
  • Royalties, rental income and other income connected to the use of property
  • Management and technical services

Capital gains. Cambodia does not have a mechanism for imposing tax on capital gains derived by individuals in Cambodia.

Deductions. An allowance for a spouse and minor dependent children in the amount of KHR75,000 per person per month is deductible from taxable salary.

Rates. The employer must withhold ToS from Cambodian resi­dents at progressive rates of 5% to 20%. A flat rate of 20% applies to nonresidents. The following table presents the ToS rates imposed on the monthly taxable salary of residents.

Monthly taxable salary

Exceeding
KHR
Not exceeding KHR Rate

%

0 800,000 0
800,000 1,250,000 5
1,250,000 8,500,000 10
8,500,000 12,500,000 15
12,500,000 20

 

Tax on Fringe Benefits. The Tax on Fringe Benefits (ToFB) is imposed on taxable fringe benefits provided by an employer, including the providing of, among other items, private use of vehicles, accommodation, food, utilities, household personnel, low-interest loans, discounted sales, educational assistance (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 20 January 2014, the following allowances received by factory 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 regard­less of job classification and function (including overtime meals)
  • Contributions to the Social Security Fund within the limit pro­vided 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

Other taxes

Net worth, gift, inheritance and estate taxes are not imposed in Cambodia.

Social security

The two types of social security schemes in Cambodia are pen­sion and occupational risks. The occupational risks scheme is currently being applied. However, the pension scheme has not yet been implemented.

The occupational risks scheme covers work-related accidents, accidents commuting between home and the workplace and other occupational diseases. Employers who have eight or more employ­ees must register with the National Social Security Fund and make an occupational risks contribution of 0.8% of the monthly aver age wages of the employees. The monthly average wage per employee is capped at KHR1 million per month. As a result, the maximum occupational risks contribution per employee is approx­imately KHR8,000 (0.8% x KHR1 million).

The occupational risks contributions are not refundable.

Tax filing and payment procedures

Employees and other individuals are not required 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.

The ToS and withholding tax return must be filed with and the amount of tax must be paid to the tax authority by the 15th day of the following month.

Cambodia does not require the filing of an annual ToS or per­sonal income tax return.

Double tax relief and tax treaties

Relief for foreign taxes. A resident person who receives foreign-source 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. Cambodia recently entered into a double tax treaty with Singapore, but this treaty has not yet been ratified.

  • 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 South­east Asian Nations (ASEAN) such as Indonesia, Laos, Malaysia, 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 business-entry visa. Depending on an employee’s nationality, visas may be obtained from any Cambodian Embassy in the home country or 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)

Work permits

All foreign nationals who wish to work in Cambodia must obtain work permits from the Cambodian Ministry of Labor. To be eli­gible 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 sent to the Ministry of Labor with the following required documents and information:

  • An application form
  • Passports or an equivalent document with proper visa
  • Four photographs (4 cm x 6 cm), taken in the front without hat and glasses
  • Certificate from the employer stating the total number of Cambodia and expatriate employees
  • Medical certificate of employee from employee’s home country that is not older than six months
  • Employment contract
  • 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 indi­vidual 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 in 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 expi­ration. Before March of each year, an application to renew the work permit must be submitted to the Ministry of Labor together with the following documents:

  • Letter requesting the renewal of a work permit for the employee
  • An original passport with a business visa that is valid for 6 or 12 months
  • Six photographs (4 cm x 6 cm)
  • Ten photographs (3 cm x 4 cm)
  • New employment contract, if any
  • Recent medical certificate of employee obtained from the Cambodian Medical Department of the Ministry of Labor
  • Certificate from employer stating the total number of Cambodian and expatriate employees
  • Annual tax fee

Residence permits

Any person who does not have Cambodian nationality is consid­ered 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 rec­ognized by the Ministry of Interior.

The following documents must be submitted to obtain a perma­nent resident card:

  • An application form for a permanent resident card
  • A copy of the Proclamation recognizing the alien as an immi­grant 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

Family and personal considerations

Family members. The spouse and dependents of a work permit hold er must apply for a single-entry business visa and then multiple-entry business visas, which would enable them to live in Cambodia.

Forced heirship. No forced heirship rules apply in Cambodia.

Driver’s licenses. Foreign nationals can use their home-country driver’s licenses to drive in Cambodia.