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
- Tourism services
- Entertainment services
- Casino and gambling business
- Currency and financial services
- Activities related to newspapers and media
- Professional services
- Production and processing of wood products
- Production of tobacco products
- Real estate development
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 circ*mstances.
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:
| Property | Rate | Method |
| Have specific useful life | Based on useful life | Straight-line |
| No specific useful life | 10% | Straight-line |
Tangible property:
| Property | 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 anddoes not constitute legal advice.
As a seasoned expert in corporate taxation with a comprehensive understanding of global tax systems, I'll delve into the intricate details of the concepts mentioned in the article about corporate income tax in Cambodia.
Corporate Income Tax Rates: Corporate income tax (CIT) in Cambodia varies based on the size and residency of a company. The standard rate is 20%, but small taxpayers have a range of 0% to 20%. Medium and large taxpayers, however, are subject to the full 20% rate.
Company Size Classification:
- Small Companies: Annual turnover between KHR 250 million to KHR 700 million. Criteria include turnover for consecutive months, participation in bidding, and consultation for goods or services.
- Medium Companies: Annual turnover between KHR 700 million to KHR 4,000 million. Includes legal person or representative office status and involvement with state institutions, associations, etc.
- Large Companies: Annual turnover exceeding KHR 4,000 million. Encompasses subsidiaries of multinational companies or branches of foreign companies, along with Qualified Investment Projects (QIPs).
Additional CIT Rates: Apart from the standard rates, specific activities like oil or natural gas production, and certain insurance services, have different CIT rates. For instance, general insurance falls under a 5% CIT rate.
Residency Criteria: A resident taxpayer is one organized or managed in Cambodia or having Cambodia as its principal place of business. Non-resident taxpayers are those with a permanent establishment in Cambodia, including a fixed place of business or online activities.
Tax on Worldwide and Cambodia-Sourced Income: Resident taxpayers are taxed on worldwide income, while non-residents are taxed only on income sourced within Cambodia.
Year of Assessment and Filing Deadlines: The year of assessment for companies in Cambodia follows the calendar year. Corporate income tax returns must be filed within three months after the tax year-end. Monthly returns, if applicable, are due by the 20th of the following month.
Prepayment of CIT and Minimum Tax: Prepayment of CIT is mandatory and equals 1% of the company's turnover in the previous month. Minimum tax, imposed at 1% on annual turnovers, is separate from CIT. Proper accounting records exempt companies from minimum tax, and prepayments may offset minimum tax obligations.
Tax Incentives for SMEs: The Ministry of Economy and Finance provides tax incentives for small and medium-sized enterprises (SMEs) based on company size, annual turnover, and number of employees.
Depreciation of Property: Property depreciation in Cambodia is categorized into classes, and specific rates and methods apply. For instance, tangible property like buildings, computers, and automobiles have different depreciation rates.
Non-Deductible Expenses: Certain expenses are non-deductible in Cambodia, including accounting depreciation, donations, extravagant or unrelated business expenses, and penalties for violations of taxation laws.
In conclusion, navigating corporate income tax in Cambodia involves understanding size classifications, residency criteria, additional CIT rates, filing deadlines, prepayment obligations, minimum tax, incentives for SMEs, and the intricacies of property depreciation and non-deductible expenses. For more detailed information on starting a business in Cambodia or specific CIT services, consulting with our experts is recommended. Please note that this overview is for informational purposes and does not constitute legal advice.
