Seize theopportunity
Investing in Cambodia
2024 and beyond

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Table of Contents
About KPMG

3

Cambodian economy overview

4

Setting up a business in Cambodia

13

Accounting and reporting requirements

15

Other compliance requirements

18

Cambodia tax guide

19

Glossary 58

2Investing in Cambodia 2024

© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

About KPMG
Who we are
KPMG is one of the world’s leading professional
services firms. We are proud of our firm’s strong andestablished reputation, a reputation that is built on along history of independence, integrity and objectivity.
It is what drives us to deliver clear and practical advice
to help our clients grow and succeed in their chosen
fields. It is what makes us committed and successful
leaders in our profession.
Global presence
Through helping other organizations mitigate risks andgrasp opportunities, we can drive positive, sustainablechange for clients, our people and society at large.
KPMG firms operate in 143 countries and territories,
and in FY23, collectively employed more than 270,000
partners and people, serving the needs of business,governments, public-sector agencies, not-for-profits
and through KPMG firms' audit and assurance practices, the capital markets. KPMG is committed toquality and service excellence in all that we do,bringing our best to clients and earning the public's
trust through our actions and behaviors both professionally and personally.
We lead with a commitment to quality and integrity
across the KPMG global organization, bringing apassion for client success and a purpose to serve andimprove the communities in which KPMG firms
operate. In a world where rapid change and unprecedented disruption are the new normal, we inspire
confidence and empower change in all we do.
KPMG in Cambodia
KPMG in Cambodia was established in 1994. Today,with over 350 professionals, KPMG is one of thelargest professional services firms in Cambodia with abalanced mix of international and local clients. In
Cambodia, our local experience, enhanced by thetechnical and industry knowledge of our global
network, means we have the tools and knowledge togain a deeper understanding of our clients’ businesses. It enables our professionals to turn knowledge
into value for the benefit of our clients, our people, andthe capital markets.

3

Our leadership
KPMG in Cambodia is committed to investing in ourpeople, services and quality to help our clients achievesustainable and strong business performance.
We are also committed to appropriately delivering on
our capital markets responsibilities, as well as assisting
our clients in effectively communicating true businessperformance to stakeholders.
Supporting our communities
KPMG in Cambodia has a long history of supportingthe communities in which we live and work. This
contribution takes the form of our people’s time,knowledge and experience, as well as our financial
donations and grants.
Nge Huy
Senior Partner
Head of Audit

Investing in Cambodia 2024
© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of
independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Cambodia economy overview
Market Overview
EconomyCambodia has been one of the top-performing
economies in Asia. As the country emerges from thesocial and economic effects of the Covid crisis, a rapid
return to the high levels of growth seen pre-Covid is
now anticipated.
Cambodia will see some positive effects from theCambodia-China FTA and the Regional Comprehensive
Economic Partnership (RCEP, a mega-regional tradedeal) in 2022-26. The latter will promote inward
investment by reducing regulatory uncertainty andharmonising standards.
Cambodia has a strong labour protection regime, andwhile wages are rising with the development of theeconomy, the country still remains competitive in theregion. In response to global trade concerns, thegovernment has introduced a number of measures toreduce production and supply costs and encourage
further foreign investment.
Sustainability
Cambodia is one of the countries in the ASEAN region
that has one of the lowest levels of CO2 emissions(metric tons of CO2 emissions per capita).
As part of the Kingdom's commitment to sustainable
and inclusive economic growth, the Ministry ofEnvironment launched the five-year Partnership for
Action on Green Economy (PAGE) Cambodia on May
12, 2023.
The National Strategic Plan on Green Growth 20132030 and the Long-term Strategy for Carbon Neutrality(LTS4CN) are prominent examples of the Kingdom’scommitment to green-economy objectives. He notedthat the latter strategy was submitted to the UN
Framework Convention on Climate Change (UNFCCC)
in 2021.

4

Investing in Cambodia 2024

© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

GDP, GDP Growth, Inflation%

US$ billion
40

7

6.2
6

35

5.2

5.3

6

37
34

30

5

25

31.2

29.5

27

4

20
3

3

15
2

10

0

5.3

2.9

5

2021

2022e
Nominal GDP (US Billion)

2.1

2023e
Inflation (%)

1

2

2024f

2.7
0

2025f

Real GDP Growth (%)

GDP by Sector (%)

10

8.6

8.3

8.2

8
6.1
6

0
-2

5.9
6.5

5.6

4
2

7.5

4.5
1.1

2.3

0.7

2021

2.2
1.3

2022e

2023e

2024f

2025f

-1.9

-4
Industry

Services

Agriculture

Source: Economist Intelligence Unit
5

Investing in Cambodia 2024

© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Banking System

Advantages of investing in Cambodia

Limited access to capital is one of the constraints todoing business in Cambodia. Commercial banks areprimary sources of funding.
The minimum capital requirements for financial
institutions are as follows:

ASEAN membership offers
regional trade benefits• KHR 200 billion (~US$50 million) for a commercialbank incorporated as a foreign branch, whose parent
bank is rated “Investment Grade”• KHR 300 billion (~US$75 million) for a commercialbank incorporated as a foreign branch, whose parent
bank is NOT rated “Investment Grade”; a foreignsubsidiary or a local company

WTO member since 2004
increasing trade integrations• KHR 60 billion (~US$15 million) for specialised banks
incorporated locally• KHR 120 billion (~US$30 million) for microfinancedeposit-taking institutions• KHR 6 billion (~US$1.5 million) for microfinanceinstitutions.
Duty free or preferential
export access to mostdeveloped economies

Currency
The local currency, the Khmer Riel (KHR), wasintroduced in 1980. The Cambodian economy isclassified as partially dollarised, given that the US dollar
circulates in conjunction with the official national
currency, as opposed than fully dollarised economies
where the dollar is the only legal tender. Based on theeconomic and monetary statistics report issued in
November 2022 by the National Bank of Cambodia,
89% of the deposits of Cambodian residents andnon-residents are denominated in foreign currency.

Favorable investment
environment

Land Ownership
The law restricts foreigners from owning land in
Cambodia. Foreigners are allowed to have a renewablelong-term lease for up to 50 years plus 50 years andfreehold ownership of certain condominiums.
Business Sectors
Garment, light manufacturing, automotive parts, luggage
and furniture continue to be the country’s key growth
drivers, and attract new foreign investments each year.

6

Investing in Cambodia 2024

One of Asia’s lowest labourcosts and a dynamic workforce© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Land area

Population

Capital City

2024f

181,035 Km

Trade Balance

Minimum Wages

Import (2024f)

2024

US$204/month17.1 Million

Phnom Penh

US$29.6 Billion

2025f

Provinces & cities

Exports (2024f)

17.3 Million

25

US$25.6 Billion

GDP Growth %Nominal GDP

GDP/head (at PPP)

Exchange rate
US$ to KHR

2024f

2024f

2024f

2

6.0%

US$34.0 Billion

2025f

2025f

6.2%

US$37.0 Billion

US$6,231

Inflation
2024f

2024f avg.

4,077

2.0%

Source: populationpyramid.net/cambodia/2024/

Source: Economist Intelligence Unit

Population of Cambodia 2024
7

Investing in Cambodia 2024

© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Cambodia Securities Exchange (CSX)

Listing on the stock market could have many benefits for the company.
Among others, they could include raising capital for expansion and growth,
providing transparency around the value of the business, encouraging
employees’ commitment by rewarding them with something of real value,
improving the public profile and reputation of the company by drawing theattention of investors and the media, and improving the confidence andstanding of suppliers, investors and customers in the marketplace.
Nge Huy
Senior Partner
Head of Audit

The Regulator
The Securities and Exchange Regulator of Cambodia (SERC) regulates the
securities industry in Cambodia. The SERC is established under the law on
the Issuance and Trading of Non-government Securities.
Companies Listed on the CSX
As of 31 August 2023, there are 11 companies listed on the CSX, including
three State-owned enterprises (SOEs) - Phnom Penh Water Supply
Authority (PWSA), Phnom Penh Autonomous Port (PPAP), Sihanoukville
Autonomous Port (PAS); and seven private companies - Grand Twins
International (Cambodia) Plc (GTI), Pestech (Cambodia) Plc., Phnom Penh
SEZ Plc (PPSP), DBD Engineering Plc. (DBDE), JS Land Plc. (JSL),CAMGSM Plc. (CGSM), MENGLY J. QUACH EDUCATION PLC. (MJQE)
and one bank – ACLEDA Bank Plc.
Corporate bonds
As of 31 August 2023, the listed bonds on the CSX consist of government
bonds issued by the Ministry of Economy and Finance and corporate
bonds from 5 companies – RMA (Cambodia) Plc, Phnom Penh Commercial
Bank (PPCB), Telcotech Ltd, Royal Railway Plc., and Golden Tree Co., Ltd.

8

Investing in Cambodia 2024

© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Key Operating Rules

Minimum trading unit
Price variance ranges from KHR10 to
KHR1000, depending on share the price.

Market hours, trading times
The market is open from 8:00am to 3:00pm,
Monday-Friday and divided into three sessions.

Daily price limit+/- 10% of the base price, or KHR10 where
the base price is below KHR100.

9

Investing in Cambodia 2024

© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Key Settlement Rules
Settlement time

Good faith deposit

Settlement is performed two days after
the trade, T+2, at 8:30am

Clearing, settlement fees
Clearing fees are 0.05% of the value ofthe settled trade

A good faith deposit of 100% of the cash
value of the trade is required from the buyer
and 100% of the securities to be traded isrequired from the seller

Account opening
Securities firms open accounts with acash settlement agent and with thesecurities depository

Stock Trading on the Exchange
The SERC requires trades on the stock exchange to be settled after two days.
ACLEDA Bank Plc., Canadia Bank Plc., Bank for Investment and Development of Cambodia, Cambodian Public Bank Plc.,
and Wing Bank (Cambodia) Plc. are licensed as cash settlement agents by the SERC.
ACLEDA Bank Plc., Tricor Securities Services Plc., and Phnom Penh Securities Plc. are licensed as securities registrar &transfer agent, and paying agent by the SERC.

10Investing in Cambodia 2024

© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Tax Incentives for Listing on the CSX
Equity Securities
Tax Incentive

PeriodCriteria

Reduction of the annual
Tax on Income (ToI)
payable by a factor of
2.5% to 50%.

3 years, commencing at the beginning of the tax yearthat the approval was given if the securities were
issued within the first 6 (six) months of the taxable
year. If the securities were issued within the last 6(six) months of the taxable year, the ToI incentive
would take effect from the following year, or any
period as approved by the Ministry of Economy and
Finance (MoEF).

• Applicable for enterprises that issue their first public equity
securities

50% reduction in
Withholding Tax (WHT)on dividends

3 years, commencing from 24 February 2022 (thedate of the implementation of this Sub Decree).

• Applies to public investors who are holding and/or
buying-selling stock securities listed on the CSX.

Exemption from Capital
Gains Tax (CGT)

3 years, commencing from 24 February 2022 (thedate of the implementation of this Sub Decree).

• Applies to public investors who are buying-selling stock
securities listed on the CSX.

Tax Debt Waiver covering
ToI, WHT, VAT, SpecificTax, Accommodation
Tax, Public Lighting Tax

Up to 10 years (i.e., N-10)• N-3 to N-10 shall apply for enterprises that fulfil the criteria
for listing in the primary market.

• 50% reduction of the ToI payable, if the issuance size inproportion to the voting rights is at least 20.001%• 49.998% to 2.5% reduction of the ToI payable, following
a declining proportion if the issuance size in proportion to
the voting rights is within 1% to 20%. However, the ToI
incentive shall not exceed KHR20B (approx. USD5M)• N-2 to N-10 for small and medium enterprises that fulfil thecriteria for listing in the secondary market.

Debt Securities
Tax Incentive

PeriodCriteria

Reduction of the annual
Tax on Income (ToI)
payable by a factor of
2.5% to 50%

3 years, commencing at the beginning of the tax yearthat approval was given if the securities were issued
within the first 6 (six) months of the taxable year. If
the securities were issued within the last 6 (six)months of the taxable year, the ToI incentive would
take effect from the following year, or any period as
approved by the Ministry of Economy and Finance(MoEF).

• Applicable to enterprises that issue debt securities with amaturity of at least 7 years.

50% reduction in
Withholding Tax (WHT)
on interest

3 years, commencing from 24 February 2022 (thedate of the implementation of this Sub Decree).

• Applies to public investors who are holding and/or buying/selling government bonds, or debt securities listed on the
CSX.

Exemption from Capital
Gains Tax (CGT)

3 years, commencing from 24 February 2022 (thedate of the implementation of this Sub Decree).

• Applies to public investors who are buying-selling debt
securities listed on the CSX.

Tax Debt Waiver

Up to 10 years (i.e., N-10)• Same criteria as with equity securities above• 50% reduction of the ToI payable, if the issuance size inproportion to the total assets is at least 20.001%.
• 49.998% to 2.5% reduction of the ToI payable, following adeclining proportion if the issuance size in proportion to thetotal assets is within 1% to 20%. However, the ToI
incentive shall not exceed KHR8B (approx. USD2M).

The above mentioned incentives may be revoked if the taxpayer fails to comply with its monthly and/or annual tax
compliance obligations, including the keeping of proper accounting records, and timely payment of tax.
Currency of the Exchange
To increase the use of the local currency, all stock quotations on the CSX must be in Khmer Riel (KHR) only. SERC
will help alleviate some of this risk at the outset by allowing dollar settlements by negotiation for the first three (3)years.
Securities Firms
The SERC granted licences to seven underwriters and various market participants.
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© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Key requirements for listing on the CSX
A Listing Entity, which intends to transfer from Growth Board to Main Board, shall meet the listing criteria of its
intended transferring market and submit the application to the Cambodian Stock Exchange.

Main board

Growth board
Shareholders'equity• KHR30 billion (US$7.5 million)• KHR2 billion (US$500,000) for thelatest year; andNet Profit• Cumulative KHR3 billion (US$750,000)
for the latest two (2) years• 200 shareholders; and• KHR2 billion (US$500,000)• Positive net income for the latest
year; or• Positive operating cash flow & grossprofit margin 10%

Shareholder• 7% of the total voting shares• 100 shareholders; and• 10% of the total voting shares• Two (2) years

Audited Financial
Statements• One (1) year

• KHR4,000,000 (US$1,000)

Listing Eligibility
Review Fee• KHR2,000,000 (US$500)

Listing Fee• KHR4,000,000 or 0.025% of thetotal market cap, whichever is larger

Annual Listing Fee• KHR4,000,000 or 0.015% of the total
market capitalisation, whichever islarger

• 0.010% - 0.030% of total market
capitalisation• Minimum KHR10,000,000 (US$2,500)• 0.005% - 0.020% of total market
capitalisation• Minimum KHR3,000,000 (US$750)• Board members: At least 5• Board members: At least 5• Independent director: > 1/5 of total
number of directors

Corporate
Governance• Independent director: >= 1/5 of total
number of directors• If foreign independent director: >= 6months of working experience inCambodia• If foreign independent director: >= 6months of working experience inCambodia• Audit Committee• Audit Committee• Risk Management Committee:
Assets >= KHR200 billion (US$50
million)• Risk Management Committee:
Assets > KHR200 billion (US$50
million)• Nomination Committee: The Board
consider establishing it and otherCommittees as necessary and as
required by SERC
12

Investing in Cambodia 2024

BOD Committees• Nomination Committee: The Board
can consider establishing it and otherCommittees as necessary© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Setting up a business in Cambodia

Many businesses require a licence or permit to operate, including areas
such as banking and financial institutions, tour agencies, real estateagencies, telecommunication operators, industrial factories, etc."

Dary So
Partner
Head of Corporate Services

Commonly used business entities
Registering a business may involve a series of ministries / institutions. The Ministry of Commerce (MoC), General
Department of Taxation (GDT), and Ministry of Labour and Vocational Training (MLVT) are the three main ministries/ institutions that an investor is required to deal with in order to register a business. In general, businesses operate
in Cambodia via the following vehicles:• A company or subsidiary incorporated in Cambodia• A branch of a company incorporated outside of Cambodia• A commercial representative office of a company incorporated outside of Cambodia
IT business registration platform
Cambodia utilises an IT business registration platform which allows investors to register a business at the MoC,
GDT and MLVT through a single platform. Normally, the registration process takes around 8 working days following
which the registered entity will receive all digital licences or certificates. Payment for registration fees can be madevia the electronic banking system. A payment receipt is issued by the automated system as evidence of payment.
Note that if your business is required to register at ministries/institutions other than the MoC, GDT, and MLVT, theinvestor will need to follow additional registration procedures specific to those relevant ministries/institutions.

13

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© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Main legal formalities for theestablishment and registrationof a new corporate entity
1. Company
The Law on Commercial Enterprise(LCE) and the Amendment on the
LCE are silent on minimum capitalrequirements. However, note thatfor certain licensed activities, there
are minimum capital requirementsthat are required to be met.
Generally, there is no restriction on
foreign ownership, except in
relation to land holding. The nameof a company must be approved by
the MoC.
A memorandum and articles ofassociation (M&A) must be
prepared for a company andlodged with the MoC, together
with the prescribed information forincorporation.
Under the Amended LCE, alimited company with a registeredaddress in Cambodia must appoint
a company secretary who is anatural person with permanent
residence in Cambodia and who is
physically fit and competent toperform the work.
2. Branch
For branch registration, relevant
documents and information about
the parent company and thebranch are required to be provided
to the MoC. The Branch is
required to use the name of its
principal e.g., "Branch of XYZ Co.,Ltd.".
A Branch office can carry out
trading activities such as sales andthe purchase of goods andservices.

14

Investing in Cambodia 2024

3. Local Branch
It is a legal requirement for apartnership or limited liability
company to register a local branchwhen a new location for thebusiness is established. A local
branch acts as an agent of theprincipal company and has noseparate legal personality from theprincipal company.
4. Commercial Representative
Office (CRO)A CRO is prohibited fromundertaking profit-making
activities including the sales ofgoods or services andconstruction. A CRO is required touse the name of its principal e.g., "Commercial Representative Officeof XYZ Co., Ltd.".
Requirements for all companies
and investors
For a company, the full name,address and nationality of theinvestors, as well as the numberof shares held in the company byeach investor are required to bedisclosed to the MoC.
For a Branch of a foreign company,
the place of registration of theforeign company, details of its
structure and other information in
the prescribed documents need tobe disclosed to the MoC.
For a CRO, the requirements are
the same as for a Branch.
If the company or branch needs toapply for a particular licence tocarry out its business operations,additional information from theinvestors may have to be provided
to the relevant government
authority.

Qualified Investment Projects(QIPs)
Both foreign and domestic
investors may apply for QIP status
by registering their project with
the Council for the Developmentof Cambodia (CDC), providing theirscope of the investment does not
fall under the list of ineligible
investment activities (“Negative
List”) or falls below the minimum
investment capital thresholds.
The level of incentives depends on
the investment activity category.
This is divided into three
categories based on whether theinvestment is in a high, medium or
low technology sector, and if theinvestment falls within a priority
sector as set by the government.
An investment company isrequired to establish and registerwith the relevant authorities in theform of a Limited Liability
Company (i.e., Private Limited
Company) to obtain QIP status
and be entitled to some or all of
the available investment
incentives.
Nominee of Shareholder(Disclosure of the shareholder’sidentity)
Shareholders who do not intend to
disclose their identity in the M&A
of a limited company can appoint a
nominee (a natural or legal person)
to represent them instead.
However, information on theidentity of the shareholder and theshareholder’s nominee agreement
shall be recorded with the MoC.

© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Accounting and reporting requirements
Accounting records & financial
statements
The Cambodian Accounting and
Auditing Regulator (ACAR), has
adopted International Financial
Reporting Standards (IFRS) for
Small and Medium-sized Entities(SMEs) and IFRS, issued by theInternational Accounting Standard
Board (IASB). The standards arereferred to as CambodianInternational Financial ReportingStandards for Small and Mediumsized Entities (CIFRS for SMEs)
and Cambodian International
Financial Reporting Standards(CIFRS). Except for non-profit
organisations, public accountability
entities and specialised banks are
required to adopt CIFRS while
non-public accountability entities
that meet the audit requirements(as set out on the following page)
are required to adopt CIFRS for
SMEs or opt to use CIFRS, if
preferred. In practice, non-public
accountability entities that do notmeet the audit requirements arealso required to adopt CIFRS for
SMEs or opt to use CIFRS, if
preferred. Not-for-profit entities
established in compliance with the
Law on Associations and NGOs
are required to apply the
Cambodian Financial ReportingStandards for Not-For-Profit
Entities (CFRS for NFPEs), or
alternatively, submit a specificrequest to ACAR to apply CIFRS
for SME. All enterprises, including
Not-for-Profit Entities, are required
to lodge their financial statementswith ACAR using ACAR’s E-filingsystem. The date of lodgement iswithin 3 months and 15 days ofthe year-end for entities which do
not require a financial statement
audit and within 6 months and 15

15

Investing in Cambodia 2024days of the year-end for entities
which do require a financial
statement audit.

be approved by ACAR, the GDTand the MoC.
Audit requirements

Law on Accounting & Auditing
The Law on Accounting and
Auditing sets forth certain
accounting requirements which
include, but are not limited to thefollowing:• Enterprises and Not-for-ProfitEntities are required to prepare
financial statements within three(3) months following theyear-end.
• Financial statements form thebasis for fulfilling tax obligations.
• Accounting records must be
maintained, and the underlying
transactions must be supported
by proper documentation.
• Accounting records should be in
Khmer language (with someminor exceptions)• Financial statements should be
in Khmer language and include
the Khmer Riel as apresentational currency (if theentity’s functional currency is acurrency other than Khmer Riel).

All enterprises and Not-for-ProfitEntities that meet the criteria set
out in Prakas No. 563SHV of the
Ministry of Economy and Financemust submit their annual financial
statements to be audited by anindependent auditor (see theillustrations on the following pagefor details on the criteria). The
audit must be carried out by anauditor registered with the
Kampuchea Institute of Certified
Public Accountants and Auditors(KICPAA).
For Public Enterprises, Public
Interest Entities (PIEs), andQualified Investment Projects(QIPs) registered with theCouncil for the Development of
Cambodia (CDC) in accordancewith the Law on Investment,
there is an obligation to submit
their annual financial statements
to be audited by an independent
auditor registered with KICPAA
irrespective of whether theymeet the criteria outlined inarticles 5 and 6 of Prakas No.
563SHV or not.

• Enterprises and Not-for-ProfitEntities are obligated to maintaintheir accounting records for aperiod of ten (10) years.
Book year
Generally, the tax and accounting
year is a calendar year. The tax
and accounting year-end does notneed to coincide with the calendar
year, although any change must

© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Penalties for non-compliance
Sub-Decree No. 79 ANKr.BK issued on June 1, 2020, and effective since 11 September 2021 sets out a series ofpenalties for violations of the Law on Accounting and Auditing. This Sub-Decree provides ACAR with the power topenalise enterprises that do not comply with the various requirements of the Law on Accounting and Auditing.
Under the sub-decree, first offences are penalised with financial penalties and repeat offenders are subject toincreasingly large financial and non-financial penalties.

Total expenses of above KHR2,000,000,000 (approximately US$500,000)
Average employee number of 20 and above

Audit requirements—NGOs• Should meet all criteria• If not, financial statements submission on a voluntary basis
Prakas 563MEF.Prk dated 10 July 2020 on the Obligations to get Financial
Statements audited by an Independent Auditor

Annual turnover of KHR4,000,000,000 (approximately US$1,000,000) and above
Total assets of KHR3,000,000,000 (approximately US$750,000) and above
Average employee number of 100 and above

Audit requirements—Commercial Entities• Meet 2 out of 3 criteria
Prakas 563MEF.Prk dated 10 July 2020 on the Obligations to get Financial
Statements audited by an Independent Auditor

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17

Investing in Cambodia 2024

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Other compliance requirements
National Social Security Fund (NSSF)
All entities with at least one (1) employee are required to register with the NSSF, file monthly reports, and makemonthly contributions to the NSSF for three social security schemes: the "occupational risk scheme", the"healthcare scheme", and the “pension scheme”. The payment of monthly contributions to the NSSF must be
performed by the 15th of the following month and the employee report must be reported to the NSSF by the 20thof the following month. Contributions for the occupational risk and healthcare schemes are wholly borne by theemployer or owner of an enterprise / establishment, whereas contributions for the compulsory pension scheme
are borne 50% by the employer and 50% by the employee. The pension scheme is a new government initiative,
coming into effect on 1 October 2022.
Annual Declaration of Commercial Enterprise (ADCE)All entities registered with the MoC are required to prepare and file an ADCE with the MoC once a year. The filingmust be done within three (3) months from the due date as notified by email from the MoC. In addition, startingfrom 1 January 2023 onwards, entities are required to register a national domain name (.com.kh), and must use
this national domain email address when filing their (ADCE) with the MoC.
Labour Law ComplianceEnterprises with at least one (1) employee are required to register with the MLVT. After the initial registration,enterprises are required to notify the labour office on an ongoing basis of any relevant changes, such as staff
movements and other amendments in the online system. Enterprises wishing to employ foreign staff must apply for a
foreign manpower quota (FMQ) annually and for work permits for foreign staff.
All enterprises/companies shall be subject to penalties for failure to apply for FMQs and work permits within thedeadline.
Other obligations for employers, having 8 staff or more, will include registration of internal work rules and fulfillingtrade union and staff representative election requirements.
Most labour filing and registration requirements with the MLVT for local and foreign staff can be processed in 2
online systems, the so-called Labour Automated Centralised Management System (LACMS) and the Foreign
Workers Centralised Management System (FWCMS).
From 1 June 2022, all enterprises/companies/factories under the scope of the Cambodian Labour law have acompulsory obligation to make a self-declared labour inspection online two (2) times a year, the first time before
the end of June and the second time before the end of December each year. All enterprises/ companies/factories
shall be subject to penalties for failure to comply with the requirements above.
Liquidation and de-registration
Currently, no formally established procedure for the voluntary liquidation of a registered entity in Cambodia exists.
This process historically required the appointment of a director of the company as the liquidator. Upon the
promulgation of the Law on Amendment of the Law on Commercial Enterprise on 29 January 2022, newrequirements exist for the process, including that a liquidator must be appointed by the Shareholder and that theliquidator must also be an Auditing and/or Accounting Firm licensed by the Accounting and Auditing Regulator(ACAR). Additionally, any legal entity providing liquidation services is required to have at least one (1) lawyer who isa member of the Bar Association of the Kingdom of Cambodia or must have a Memorandum of Understanding(MoU) with a law firm. Responsibilities of the liquidator include requirements to prepare and sign a Liquidation
Report to confirm its contents as part of the liquidation process and to maintain the accounting records, financial
statements, and other records on behalf of the de-registered entity for up to 10 years.
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Cambodia tax guide

Taxpayers will be required to submit and pay taxes to the General
Department of Taxation (GDT) on an annual and monthly basis.“

Mona Tan
Partner
Head of Corporate Tax

Effective from 16 May 2023, the new Law on Taxation (2023 New LoT) abrogates the former LoT, dated February
24, 1997, the amended LoT dated 31 March 2003, and other regulations that are contrary to this 2023 LoT. The
existing Sub-Decrees, Prakas (a regulation) and Instructions, implementing the provisions of the old LoT remain to
be valid unless otherwise amended by the specific provisions of this New LoT, or by subsequent Sub-Decrees,
Prakas, or Instructions.
Overview
Taxpayers under the self-assessment regime (SAR) are categorised into three classes of taxpayers:
Taxpayers
Small

Medium1

Large2 (Type 1)

Large (Type 2)

Classification criteria
Business Sector

Annual Turnover

Agriculture, Service, Commercial

KHR250M – KHR1,000M (approx. US$62.5K – US$250K)

Industrial

KHR250M – KHR1,600M (approx. US$62.5K – US$400K)

Agriculture

KHR1,000M – KHR4,000M (approx. US$250K – US$1,000K)

Service and Commercial

KHR1,000M – KHR6,000M (approx. US$250K – US$1,500K)

Industrial

KHR1,600M – KHR8,000M (approx. US$400K – US$2,000K)

Agriculture>KHR4,000M (approx. US$1,000K)

Service and Commercial>KHR6,000M (approx. US$1,500K)

Industrial>KHR8,000M (approx. US$2,000K)

All sectors>KHR10,000m (approx. US$2,500K)

Small taxpayers must also follow the “simplified” tax compliance process and can file monthly taxes through anapplication. Medium and large taxpayers must file their taxes through GDT’s online system.

1: Including legally registered entity, the Representative Offices.
2: Including all Branches of foreign entity, and QIP-registered entities.

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Taxation of companies
Introduction
Corporate taxpayers in Cambodia are classified aseither resident taxpayers or non-resident taxpayers.

Rules and procedures for taxation are further
determined by Prakas (regulation) by the Minister of
Economy and Finance.
Capital Gains

A resident taxpayer is primarily an enterprise that has aplace of management and carries on business inCambodia, as defined below. A non-resident taxpayer
is an enterprise that derives Cambodian source
income but does not have a place of management in
Cambodia.

Capital gains realised by resident legal entities shall betreated as income, subject to tax at the prevailing
ToI rate.
Dividends

A non-resident taxpayer will be deemed to be a
Cambodian resident for tax purposes if it is found tohave a Permanent Establishment (PE) in Cambodia(see page 40 for PE definition).

A dividend is defined as a distribution of property or
money, made by a legal person to a shareholder withthe exception of the distribution of capital or equity
interest in a complete liquidation of the Company.

A resident taxpayer is subject to Tax on Income (ToI)or Corporate Income Tax (CIT) on income derived fromboth Cambodian and foreign sources, whereas a
non-resident taxpayer is subject to ToI/CIT in respectof its Cambodian source income only.

Dividends received from non-resident companies are
subject to income tax in Cambodia. A credit is allowed
for tax paid overseas on foreign source income,subject to certain conditions

Residence

Deductions

A company is a resident in Cambodia if:• It is organised or managed in Cambodia; or

Exempt Income
Dividends received from resident companies are
not subject to income tax.

• It has its principal place of business in Cambodia.
Allowable Deductions
Taxable Income
Taxable income is the net income realised from all
results of business activities and other non-businessactivities of the physical person or legal person.

Allowable deductions include expenses incurred in thecourse of carrying on a business, with certain
conditions/limitations based on the nature of theexpense.

Taxable income includes capital gains, interest, rent,
royalty, and income from financial assets orinvestment assets including immovable property.

Non-deductible Expenses

For legal persons, the taxable income shall be theresult of adjustment of accounting results in the tax
year in accordance with the provisions on taxation.

• Increase in provisions (except provision made bybank and financial institution which is covered byseparate rules)

For physical persons, taxable income is the result of
total income in the tax year offset by expenditures andother allowances (to be determined by a Sub-Decree).

• Any expense on activities generally considered to beamusement, recreation, entertainment

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Investing in Cambodia 2024

Non-deductible expenses include:© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
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• Personal expenses, except for fringe benefits which
are subject to fringe benefit tax• Penalties, additional tax and late payment interest
imposed for violation of the LoTTax losses can be carried forward for generally amaximum of five (5) years (except for tax loss frompetroleum and mineral resource operations which arecovered by separate rules). Losses cannot be carried
back. Tax losses may be forfeited depending on
certain criteria (e.g., change in business activity or if
the taxpayer is subject to a unilateral tax
reassessment).

• Non-deductible tax expenses

Grouping/Consolidation• Donations, grants or subsidies

There are no grouping or consolidation provisions in
Cambodia.

• Any loss a on sale or exchange of property, directly
or indirectly, between related parties• Extravagant and/or unrelated business expenses
Tax Depreciation/Capital Allowances• Unpaid salaries and related party expenses, subject
to the deductibility rules and compliance with the“180-day rule” payment period as per recent ToIPrakas No.098
Losses21

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Depreciation is deductible in accordance withspecified rates if the assets are used in the course ofcarrying on a business. Depreciable assets are divided
into the following classes/categories, and are
depreciated at the following rates:© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

ClassAnnual TurnoverIntangible Assets

Straight line based on useful life or 10% straight-line if no specific useful life.
Purchased goodwill (i.e., forming part of the intangible asset) is allowed to be amortised.

Natural Resource

Depletion shall be allowed as a deduction in reference to the total production during the year andthe estimated total production from the natural resource
For rubber crops, a depreciation rate shall be allowed for a period of 20 years with a depreciation
rate of 3% to 5%, depending on the turnover year.

Agricultural Assets (e.g., rubber
plantations, other agricultural
crops, animal husbandry)Non-rubber agricultural crops shall be depreciated on a straight-line basis based on the expected
life of production or 5% per year, whichever is shorter
Animal husbandry shall be depreciated on a straight-line basis based on the expected life of
production or 5% per year, whichever is shorter
10% straight line depreciation shall apply to “non-concrete“ assets

Class 1 Buildings & Structures
5% straight line depreciation shall apply to “concrete” assets
Class 2: Computers, electronic
information systems, software, anddata handling equipment

50% diminishing value

Class 3: Automobiles, trucks, officefurniture and equipment

25% diminishing value

Class 4: All other tangible property

20% diminishing value

Tax depreciation (i.e., full year) shall commence in the
tax year when the asset was put into service, or in thecommencement year of production. No tax
depreciation shall be claimed in the year of disposal.

There is no specific thin capitalisation legislation in
Cambodia; however, a limitation on interest expense
deduction is provided under the ToI regulation, as
follows:

Fixed assets in classes 2 to 4 are accounted for on apooled basis. Therefore capital gains or losses on thedisposal of fixed assets are not calculated individually
but calculated based on the result of the pooled asset
account.

• The deduction for interest expense shall be limited
to an amount equal to the total interest income plus
50% of “net non-interest income” earned for theyear. Net non-interest income is gross income, otherthan interest income, less allowable non-interest
expenses.

Charitable contribution
The deductibility of charitable contribution expense islimited to 5% of the taxable income after tax
adjustments and before the deduction of the charitable
contribution itself.
Unutilised charitable contribution expenses cannot be
carried forward as a deduction against taxable income
in future years.

• Interest expenses, which are not allowed for
deductions in the current tax year, can be carriedforward as interest expenses for subsequent tax
years in the same limitation until the 5th tax year in
the order of the year the interest was incurred.
• Interest expense to related parties shall be allowed
as a tax deduction (i.e., applying the “180-day” rule).
This is still subject to the interest expense limitation
rule as mentioned above.

Interest Expense

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• Interest rates between related parties must comply
with the requirements under the TP regulations on
the “arms-length” principle, and the keeping ofproper TP documentation.

• Transfers (in part or in full) of interest in rights orshares in a mineral resource agreement shall betreated as a taxable transaction subject to theapplicable tax

Petroleum and mineral resource operations shall be
subject to different rules on interest expense
deduction.

• Loss carried forward is allowed until the tenth (10)year for petroleum operations and the fifth (5) year
for mineral resource operations

Tax Rates• Losses incurred in a contract area cannot be carriedforward and/or offset as a deduction in anothercontract area

• The Cambodian Tax Law provides the following
corporate income tax or annual ToI rates:• 20% on taxable income realised by a legal person.
• 30% on taxable income realised in oil or natural gas
production sharing contracts or realised from the
exploitation of natural resources including timber,minerals, gold and precious stones. Tax on Excess
Income (ToEI) shall also apply.
• 5% on taxable income on insurance or reinsurance
activities on property risk
• 0% on taxable income of the QIP during the tax
exemption period.

Taxpayers conducting Petroleum and Mineral
Resources operations shall be subject to:* Annual ToI rate of 30% on taxable income during a
tax year;* Tax on Excess Income (ToEI) at a progressive tax
rate by tranche based on:
Specific rules on depreciation, deduction, and transfer
of interest shall apply, as follows:
Excess profit ratio• Deductible provision for decommissioning costreserve based on an approved decommissioning
plan. If the actual decommissioning cost is higher
than the decommissioning plan claimed as adeduction, the difference shall be treated as adeductible expense, otherwise, the difference shallbe treated as a taxable income• Specific depreciation rules are set on depreciatingprospecting, exploration, and development costs
Sales agents supplying goods on behalf ofprincipals

Tax on Petroleum and Mineral Resources
Operations

Tranche• Deduction for interest expense is subject to a debt
to-equity ratio of 3:1

Rate

1

up to 1.3

0%2

Above 1.3 to 1.6

10%

3

Above 1.6 to 2

20%

4Above 230%

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Investing in Cambodia 2024

Recognised agents (i.e., travel agents, sales depots),
supplying goods or services on behalf of the principals,
are not required to declare and pay taxes on sales onbehalf of the principal. They are only obligated tocollect those taxes on behalf of the principals and pay
PToI and ToI on commissions earned from theprincipals.
To get recognition as sales agents, enterprises must
fulfil certain conditions such as being medium or large
taxpayers, having contracts with the principals, having
no change of ownership of the goods, maintaining
invoice compliance, and keeping an inventory of thegoods. A sales agent can apply and receive an agent
certificate from the GDT which is valid for 2 years.
Without proper recognition and certificate, the sales
agents would be liable for all kinds of principal taxes
relating to sales on behalf of the principals as if thesesales were their own income.

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member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Tax Administration
Tax Identification Number (TIN)
Business entities are required to register with the tax
administration within fifteen (15) working days, fromthe commencement of economic activities, or after
receiving the registration approval certificate or
approval letter from the relevant ministries or
institutions.

The total monthly PToI paid during the year shall beclaimed as tax credits against the annual ToI or MT
payable, whichever is higher, at year-end. The
remaining tax payable must be paid within 3 months
following the tax year 3 (i.e., the same deadline for thelodgement of the annual ToI return). Excess tax
payments may be carried forward to the succeeding
taxable periods.

For QIP-registered enterprises, separate TIN should bemaintained per activity (e.g., QIP and non-QIP
activities).

Meanwhile, a 1% Minimum Tax (MT)2 shall becomputed based on the gross annual turnover (i.e.,
unless the taxpayer is exempted from the 1% MT,
based on certain conditions). The taxpayer shall be
liable for the annual ToI or MT, whichever is higher.

Tax Returns

Tax Credits

The annual tax return must be filed within 3 months
following the tax year. The tax year is generally acalendar year unless the taxpayer obtains specificapproval to use a different taxable period other thanthe calendar year. The return must be filed irrespectiveof whether the company is making a profit or loss. The
GDT requires taxpayers to submit the ToI via the
GDT’s online tax return management system, i.e.
E-filing.

The following tax credits may be claimed as adeduction against the ToI payable at year-end:

Meanwhile, monthly tax returns are due for filing by
the 25th day of the following month via the GDT’s
E-Filing system.

• WHT credits withheld by payors, which must be
properly substantiated• Monthly PToI paid during the taxable year
• Excess tax payments from the previous taxable period• Advance Tax on Dividend Distribution (ATDD)
payments (see below related discussion on ATDD)• Foreign tax credits on tax paid overseas on foreignsource income, provided the same is properly
substantiated and subject to certain limitations

Payment of Tax
A company is subject to a monthly prepayment of ToI(PToI)1 during the year, which is self-assessed at 1%
on monthly turnover (i.e. unless the taxpayer is
exempted from the PToI based on certain conditions).
Payments of PToI are due by the 25th day of thefollowing month through the E-Filing system.

• Special tax credits granted to specific industries and/or activities as provided by the government under
specific regulations

1: A tax year Is the calendar year, but an enterprise can apply for a tax year other than the calendar year, for example, to be consistent with its parent company/ if the foreign parent company
owns more than 51% equity shares.
2: The minimum tax shall be imposed on taxpayers who maintain "improper" accounting records (i.e. effective from the tax year 2017 onwards). Under the LoFM 2018, petroleum and mineral
resource operations are not subject to minimum tax.
3: Suspensions: 1% PToI is suspended for enterprises in the agricultural sector, both for domestic supply and for export such as planting, producing and supplying certain agricultural products for
5 years starting from January 2019 and the garment industry such as textile, garment, footwear, handbag and hat for the purpose of export until the end of 2025.

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Record Keeping
Taxpayers are required to keep books of accounts, accounting records and other relevant documents for a period of
10 years, after the end of the tax year. The taxpayer must maintain accounting records in accordance with theaccounting standards in effect in the Kingdom of Cambodia. For QIP-registered enterprises, separate books ofaccounts should be maintained per activity (e.g., QIP and non-QIP activities).
Taxpayers are also required to maintain accounting records in Khmer language and Khmer Riel. Failure to comply
with the above requirements may result in a unilateral tax assessment being issued by the GDT.

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Taxation of individuals
Introduction
As of date, Cambodia has yet to implement a personal income tax regime and there is no requirement to submit apersonal income tax return to the GDT. Currently, tax on income earned by individuals from their employment
activities is withheld by the employer and remitted to the GDT through the monthly filing of the Tax on Salary (ToS)and Fringe Benefits Tax (FBT). Salary is taxed according to progressive tax rates ranging from 5% to 20%, while
fringe benefits are subject to a flat rate of 20% based on the fair market value (FMV) of the benefit.
Individual residents of Cambodia are subject to income tax on their Cambodian and foreign source income,whereas non-residents are subject to income tax on Cambodian source income only. A credit for foreign income
tax paid is allowed against Cambodian income tax (subject to certain limitations), provided the same is properly
substantiated.

Resident/Non-Resident
A person is a resident of Cambodia if the person is“domiciled in” or has a “principal place of abode” inCambodia, or the person is present in Cambodia for
more than 182 days in the current tax year.
A non-resident means any person who does not fallunder either of the above-stated criteria.
Employment Income/Employee
Individuals receiving remuneration in the course of
employment are subject to tax on salary. Remuneration
includes salary, wage, bonus, overtime, and othercompensation. A fringe benefits tax on employerprovided cars, housing, low-interest loans, and free,subsidised or discounted goods and services is levied on
employers based on the FMV of the fringe benefits. The
tax rate is currently 20% and it is payable monthly. The
actual cost of providing the benefit will normally be
deductible for the employer itself except for the fringe
benefit tax itself.

• Reimbursement of business expenses by theemployer, provided that the costs are incurred in thecourse of employment, the amounts are notexcessive, and they can be substantiated;• Indemnity for layoff within the limit as stated in the
Labour Law;
• Additional remuneration received with social
characteristics as provided in the Labour Law andSocial Security Schemes Law;
• Supply of free or subsidised uniforms or special
professional equipment used in the course of
employment; and• Flat allowances for mission and travel received in thecourse of employment.
• Employees under the Undetermined Duration
Contract (UDC) are entitled to annual seniority
indemnity payable twice per year. This payment shallbe exempted from ToS for an amount up to
KHR4,000,000 (~$1,000).

Exempt Income
Employment-related payments received by a tax
resident that are not subject to income tax include:

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The following allowances may be exempted fromeither ToS or FBT:• Commuting expenses (between home & workplace),
accommodation allowances, and accommodation
provided within the Company’s premise (all inaccordance with Labour Law),

GDT’s E-Filing system. The monthly ToS and FBT
declaration is considered to be a final tax forindividuals as there is no requirement to submit aseparate personal income tax declaration.
Personal Allowances and Rebates of Tax
The following relief is provided to a resident employee:• Meal allowances were provided to all workeremployees regardless of position/function,• Social security or welfare fund (within the limit of thelaw),• Health insurance or life/health insurance premiums
were provided to every employee regardless of
position or function,

Relief for the month

KHR

Child relief for each child (14 years old or
25 years old if still at school)

150,000

Dependent spouse (must be housewife)

150,000

Tax Rates
Residents• Baby care allowance or baby nursery expense (inaccordance with Labour Law)
Companies and enterprises are required to submit anallowance policy for the above allowances to the GDT
to be eligible for the above tax reliefs.
Deductions
Employees are not allowed any deductions
against their salary income as employees are notrequired to submit annual tax returns.

The ToS rates are as follows (effective from 1 January2023):
Taxable Income for theMonth (KHR)

Progressive
Tax

From 0 - 1,500,000

0%From 1,500,001 - 2,000,000

5%From 2,000,001 - 8,500,000

10%From 8,500,001 - 12,500,000

15%Over 12,500,000

20%

Tax Administration
Non-residents
Returns and Assessments
The filing and payment of ToS and FBT to the GDT isdue by the 25th day of the following month via the27

Investing in Cambodia 2024

Non-residents are taxed on salary from Cambodiansources at a flat rate of 20%.

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Indirect and other taxes
Value Added Tax (VAT)
VAT is chargeable on a wide rangeof goods and services supplied in
Cambodia and on the importationof goods. The basic principle of
VAT is to charge tax at each stageof production, allowing eachsupplier credit for the tax paid sothat the VAT eventually impacts
the final consumer.
Taxable supplies attract VAT ateither the standard rate of 10% or
the zero rate. Subject tocompliance with certain
conditions, the zero rate applies tothe export of goods and services,
certain charges in relation to theinternational transport of people
and goods, supply of goods andservices by supporting industries
QIP/contractors to particular
export industries.
Exported services
To qualify as an exported service(i.e., subject to 0% VAT), it is not
sufficient to prove that the supply
is billed to a non-resident person,
but to also prove that the services(or portion thereof), do not relate
to, were not consumed, or benefit
any business or operations in
Cambodia (i.e., the burden of
proof is on the taxpayers).
Documents such as contracts,bank statements, invoices, etc.,
must also be maintained for the
GDT’s review.
Imported services
For business-to-business (B2B)
E-commerce transactions, the VAT
on the transaction shall be
accounted for via the “reverse
charge” mechanism. Under the“reverse charge” mechanism, theresident taxpayer receiving the
supply from the non-resident
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Investing in Cambodia 2024

taxpayer shall account and pay forthe output VAT on such supply onbehalf of the non-resident
taxpayer. Correspondingly, input
VAT shall be allowed as tax credits
based on the current tax
regulations in effect (Articles 6 &7 of Sub Decree No.65).

• Importation of articles for
personal use that are exempt
from customs duties;

As of date, it seems that the“reverse charge” mechanism on
imported services only applies toE-commerce transactions asprovided under Sub-Decree
No.65.

• Educational services;

Imported goods• Supply of water for public use;and solid-liquid trash collection or
cleaning service

10% VAT shall generally apply to
all goods imported into Cambodia
based on the value of theimported goods, including any
customs duty, insurance, andfreight charges. Certain
importation of goods may not be
subject to import VAT (e.g., VAT
state-charge importation,
importation of non-commercial
goods).
Exempt Supplies
The following are considered
exempt supplies, not subject to
VAT:• Public postal service;• Hospital, clinic, medical, anddental services and sales of
medical and dental goods
incidental to the performance ofsuch services;• Passenger transportation
services by a wholly state-owned
public transportation system;• Insurance services;• Primary financial services;• Non-profit activities for public
interest that have beenrecognised by the Ministry of
Economy and Finance (MoEF);• Supply of unprocessed
agricultural products;• Supply of electricity; andVAT State-charge
VAT on certain supply and importof certain agricultural products
shall be borne by the State (i.e.,State Charges). Domestic supplies
of certain basic foodstuffs such asmeat, eggs, fish, spice, sauces,etc. shall be considered VAT
State-charge transactions as per
relevant Prakas.
VAT Registration
Taxpayers in Cambodia who are
registered under the selfassessment regime shall beassigned a VAT registration
number. Generally, such VAT
number shall be used by the said
taxpayer in its tax complianceobligations in Cambodia (including
direct and indirect).
Sub Decree No.65 was issued on
8 April 2021 implementing certain
provisions covering the supply of
goods and services traded through“Electronic Commerce”(E-commerce) in Cambodia. Under
this Sub-Decree, non-resident
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transactions, with no permanentestablishment (PE) in Cambodia,
shall be required to register with
the GDT. This registration
requirement is for VAT purposes
only (Article 4 of Sub Decree
No.65).
VAT on E-commercetransactions
As defined under this Sub Decree,“digital goods” refers to intangible
goods purchased, supplied, andsent entirely online, while “digital
service” refers to services
performed online. “E-commerce”
refers to the purchase, sale, rental,
and exchange of goods orservices, including commercial
activity online.
The Sub Decree provides adetailed list of E-commercetransactions covered by this Sub
Decree which includes, but is not
limited to, the supply of softwareand other services related thereto,
online shopping or auctions,advertising, website hosting, data
retrieval, consumption of digitalproducts and/or contents via
download, real-time streaming,
subscription, or other means.
This VAT Sub-Decree introduced
the applicability of the “reverse
charge” mechanism for B2B
E-commerce transactions onimported services as mentioned
above. Meanwhile, for B2C
E-commerce transactions, thenon-resident taxpayer shall declareand pay for the VAT on thetransaction to the GDT.
Since the implementation of the
VAT on E-commerce on 1 April
2022, a promising tax collection
performance has been observedby the GDT from E-commercetransactions. The GDT has been
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Investing in Cambodia 2024

quite active in flagging nonresident E-commerce suppliers
who must obtain simplified VAT
registration and comply with therules on E-commercetransactions.

Item

Rate

Domestic and international
telephone services

3%

Domestic and international
air tickets

10%Entertainment services

10%

VAT Refund

Cigarettes

20%

Beers

30%

Wine

35%

Energy drinks

15%

Milk-based, coffee-based,
coconut water-based drinks

5%

Non-carbonated drinks

5%

Other non-alcoholic
beverages

10%

VAT filing and payment to the GDT
are due by the 25th day of thefollowing month through theE-filing system. Monthly VAT
declaration, as well as VAT refund,can be initiated online via the
GDT’s E-filing system. In practice,a VAT refund is a time-consuming
process as the GDT needs to
conduct an audit to ascertain theveracity of the claim. In the past
years, it has been observed thatthe implementation of the online
VAT refund system speeds up theprocess, especially for taxpayerswith a “Gold Status” certificate oftax compliance.
As per recent Instruction No.018,
dated 8 August 2023, the GDT hasclarified that VAT refunds must be
submitted within 3 or 6 months, orno more than 1 year to avoid
accumulation and to speed up the
VAT refund process. Conversely,
no VAT refunds shall be granted
for input VAT credits accumulated
for more than 3 years.
Specific Tax (ST)Certain goods and services are
subject to ST, which is a form of
excise tax that applies to theimportation or domestic
production and supply of certain
goods and services.

For domestically produced goods,
the basis for ST’s calculation is90% of the selling price disclosed
on the invoice exclusive of VAT
and ST.
The filing and payment of ST to
the GDT is due by the 25th day of
the following month through the
E-Filing system.
Public Lighting Tax (PLT)
PLT is a tax levied on the sales ofalcohol and cigarette products,
both imported and domesticallymanufactured, at the first stage ofthe supply chain. Effective 1
January 2024, PLT rate shall
increase from 3% to 5%. The
basis for PLT calculation shall be
determined by the subsequent
Prakas of the GDT.
The filing and payment of PLT to
the GDT is due by the 25th day of
the following month through the
E-Filing system.

Examples of the levy of ST are:Accommodation Tax (AT)AT is a tax on the provision ofaccommodation services. AT is© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

levied at the rate of 2% onaccommodation services fees,
inclusive of other services charges
and all kinds of taxes but exclusiveof the AT itself and VAT. The filingand payment of AT to the GDT isdue by the 25th day of thefollowing month through the
E-Filing system
OTHER TAXES

Non-Resident WHT
Any resident taxpayer carrying on
business, including PE of nonresident taxpayer, who makes
payment from a Cambodiansource income to a non-resident,
shall withhold and pay as a tax inan amount equal to 14% of theamount payable. Payment from
Cambodian source income may
include the following:

Withholding Taxes (WHT)
Resident withholding tax
A resident taxpayer is required towithhold tax from the following
payments of Cambodian source
income to a resident entity:
Payment

1

tax from the recipient of theincome payment. The WHT is
payable at either the date thepayment is made or the date theexpense is recorded in the books,
whichever comes first.
The filing and payment of WHT to
the GDT is due by the 25th day of
the following month through the
E-Filing system.
Deemed dividends

Payment

Rate

Interest

14%

Dividend and “deemed
dividends” based on certaintransactions;14%

Capital gains derived in
Cambodia

14%

Management or technicalservices

14%

Income from services
performed in Cambodia;

14%

Rate

Payment for services to aphysical person, including
management, consulting,and other similar services

15%

Payment of royalties forintangible assets andinterests in minerals, oil or
natural gas

15%

Royalties from the use, orright to use intangible
property

14%

Interest payments made toa physical person or an
enterprise, except forinterest paid to a domesticbank or savings institution

15%

Other various Cambodiansource income(s) as
provided under Article 33 of
2023 LoT and Article 7 of
Prakas No.098

14%

Income from the rental of
movable or immovable
properties

10%

Interest payments on a fixeddeposit made by a domesticbank or savings institution
to a resident taxpayer

6%

Interest payments on
savings account made by adomestic bank or savings
institution to a resident
taxpayer4%

The above-mentioned rates shallbe reduced depending on theprovisions of the relevant DTA,
subject to compliance with certain
conditions. Please refer to section
5 below for the DTA signatory
countries.
The liability for WHT rests withthe withholding agent (i.e., theCambodian payor). The GDT has
no recourse to recover withholding

14% WHT shall apply on dividends
paid to non-resident persons, bothfrom actual payment of dividends
and from “deemed dividend”
transactions.
The concept of deeming
dividends, irrespective of whether
there is an actual dividend
declaration, triggers the advancepayment of the 14% WHT on
future dividend declaration. The
14% WHT shall be computed
based on the portion of theretained earnings (RE).
Subsequently, when there isactual declaration/payment ofdividends out of the RE that was
already subjected to 14% WHT on“deemed dividends”, such
dividend transaction shall not
anymore be subject to the 14%
WHT.
The following transaction generally
triggers an issue on “deemed
dividend” based on the
proportionate share of the RE
balance:• Reduction of capital or equity
interest, including repatriation of

1: Notable exemptions:
Any payment to a registered self-assessment regime taxpayer for service, rental or a certain kind of software (shrink-wrap software, site licence, downloadable software, and software bundledwith computer hardware) is exempted from WHT, provided it is supported by a proper tax invoice.
Any payment of service of less than KHR50,000 (~US$12.50) is exempted from the 15% WHT on service.

30

Investing in Cambodia 2024

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profits directly through the capital account and/or
capital reserves• Sale or transfer of shares owned by non-residents toanother person

Advance Tax on Dividend Distribution (ATDD)1"ATDD is essentially a prepayment of annual Tax on
Income (ToI) imposed on an enterprise that distributes
a dividend from income which was not yet subject toToI. ATDD applicable to QIPs could be reduced or
exempted, depending on certain conditions.
Furthermore, the redistribution of dividend income
received which was already subjected to ATDD will
also be exempted from the ATDD. The ATDD can beused as a tax credit against the annual ToI at the
year-end and any excess can be carried forward to thefollowing year."Tax on Gambling Activities
The gross gaming revenue (GGR) realised by acommercial gaming business is considered as ataxable supply provided to its players/gamblers, which
is subject to 10% output VAT and 1% PToI. The
business shall also be subject to an annual 20%
ToI/1% MT based on the rules and procedures for ToI
calculation provided under existing tax regulations.
Meanwhile, Prakas 1080, dated 30 December 2022,
provides further guidance on how to compute the
GGR for gambling activities. The same rules regarding
local and foreign withholding tax, tax on salary andfringe benefits tax shall also apply to taxpayers in thisindustry.

Patent Tax
Patent tax is a yearly business registration tax which
all enterprises carrying on business activities in
Cambodia are required to pay by 31st March. A“patent tax certificate” will be issued by the GDT uponregistration and/or after each successive change or
update with the GDT of information of the enterprisethat affects the patent tax certificate.
If the enterprise carries out different types ofbusiness, a separate patent tax certificate is required
for each distinct business activity. Likewise, if a
taxpayer carries out business in different cities orprovinces, a separate patent tax certificate is required
for each location.
The amount of patent tax payable will depend upon
the form of the business, as well as the type ofbusiness activity and the level of turnover.

1: The ATDD effectively replaces the previous Additional Income Tax on Dividend Distribution starting from the implementation of the 2020 LoFM, signed on 20 December 2019.

31

Investing in Cambodia 2024

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Patent Tax

Large Taxpayers*: either

Medium Taxpayers:

Small Taxpayers:

KHR3,000,000 (~US$750); or
KHR5,000,000 (~US$1,250) if annual
turnover is over KHR10,000 million

KHR1,200,000 (~US$300)

KHR400,000 (~US$100)* Large Taxpayers are required to pay KHR3,000,000 (~USD750) for each additional patent tax certificate, if the enterprise has any branch, warehouse or business in different cities or provinces.

Customs Duty
Customs duty is levied on certain
goods entering Cambodia. The
rates vary depending on the typeof goods. Currently, the duty rates
are 0%, 7%, 15%, and 35%.
As a member of ASEAN,
Cambodia has also implemented
the ASEAN Trade in Goods
Agreement (ATIGA) which enteredinto force on 17 May 2010. In
accordance with ATIGA, thecustoms import duties werereduced to 0-5 percent on mostgoods.
Exemptions can also be obtained
as part of the incentives offeredby the CDC for the QIP
undertaken in Cambodia.

The following legal documents are
subject to a registration tax (stampduty) of KHR1,000,000:• Company merger• Dissolution of a company
Stamp Duty
There is a 4% tax on the transferof ownership or possession rights
for immovable property ortransportation means (such as
land, buildings, and vehicles).
This 4% tax is imposed on themarket value at the time of thetransfer, payable by the party
acquiring the ownership or
possession rights and must be
paid within three (3) months fromthe date of the transaction.

Registration Tax
Tax on Immovable Property (TIP)
A registration tax of 0.1 % applies
to a transfer of shares. 0.1%
registration tax also applies to thegovernment contract value related
to the supply of goods/services
that are used under the statebudget.

32

Investing in Cambodia 2024

TIP was created in the 2010 Law
on Financial Management (LFM)
and is imposed on certain
immovable properties.
The term “immovable property” isdefined as land, houses, buildings

and constructions that are built on
the land.
This TIP is collected every year at
the rate of 0.1% on the value ofthe immovable property that ismore than the threshold of
KHR100,000,000 (approximately
US$25,000). The value of theimmovable property is assessedby the Assessment Committee,
which is set up by the MEF.
The deadline for paying the TIP is
30 September.
Tax on Unused Land
A tax is levied on unused land andthe registered owner of the land is
responsible for the payment of thetax. Tax on unused land is based
on 2% of the market price persquare meter as determined by
the Committee for the Valuationand is due to be paid annually by
30 September.
However, unused land on which’Tax on immovable property’ hasbeen paid is not subject to tax onunused land, effective from 2011
onwards.

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member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Tax Audit
Essentially, there are three kinds oftax audits: desk audit and limited
audits, and comprehensive/final
audits which are on-field audits.
Desk audit is focused on clear andeasy-to-find irregularities on the
tax returns through reconciliation
with the available information andinterviewing taxpayers. This canbe conducted within 12 months
after tax return lodgement.
Limited audit is limited in lengthand is focused on most taxes
except ToI. This can be conductedon the current tax year (N) and oneprior tax year (N-1).
A Comprehensive audit isconducted on all kinds of taxes
and information necessary. Thiscan be conducted within 3 tax
years backwards (N-3). It can beextended to 5 tax years
backwards (N-5) if there isevidence of tax evasion or there
are losses or credits carriedforward from longer than 3 tax
years backwards. The tax yearthat is subject to comprehensive
audit and any outstanding tax
liability settled by taxpayers would
be considered as “closed’ for any
further tax audits.
In case of strong evidence of tax
evasion, comprehensive audits
can be conducted further backthan 5 tax years with approval
from the Minister of Economy and
Finance.
The Director General of the GDT
can order any department to
conduct a special audit orinvestigation of the criminal

33

Investing in Cambodia 2024

offence on tax provisions on an
enterprise if there is serious
evidence showing the intentionaltax evasion of enterprises.
A “committee for enterpriseallocation” established by the GDTmanages a list of enterprises andallocates them for tax audits foreach tax year.
Selection of enterprises for tax
audits depends on the following
criteria:• Risk assessment;• Result from information
crosscheck;• Information obtained from third
party;• Information about types of taxes
or specific industries;• Information of particulartaxpayer; and• Location of enterprise, etc.
If the tax auditors find any grounds(e.g., under-declared tax, noncompliance, etc.), they can issue a
tax reassessment notice. Anyreassessed tax will be subject topenalties as follows:

The taxpayers will have thirty (30)days to protest or pay the tax
reassessments to the GDT.
Otherwise, the GDT will initiate
the tax debt collection process bysending it to the tax liability office.
Taxpayers can settle the tax debt
all at once or request to settle ininstalments, provided they haveagreements with the GDT for
instalment settlements. Taxpayers
can also settle just the portion oftax debt they agree with andprotest the remaining portion with
the GDT. Individual shareholder
may also choose to settle only aportion of the tax debt based on
their shares however this does notdissolve them of their
responsibility for the company.
A “Committee for Tax Arbitration(CTA)“ was set up, under the
MEF. It is stated that thiscommittee will play the role of athird-party arbitrator if the
taxpayer is dissatisfied with the
GDT‘s decision on the initialprotest above. However, the CTA
is not yet fully functional, whichmeans that resolutions on tax
disputes are currently being
handled by the GDT, for further
discussion and resolution. As amatter of practical reality, there islimited recourse for a taxpayer inany dispute with the GDT.

• 10% if the taxpayer is negligent• 25% if the taxpayer is seriously
negligent• 40% if it is a unilateral tax
reassessment

The detailed procedure of tax
protest is described in Prakas
1470 by the MEF and Sub-Decree
03 by the Royal Government of
Cambodia.

In addition, a 1.5% interest foreach month shall also apply forlate payment.

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Taxation of capital gains
Introduction

property and foreign currency. The capital gain isconsidered as realised at the time of:Prior to the introduction of the CGT regime, capitalgains derived in Cambodia were not essentially taxed,
except for capital gains derived by registeredenterprises which are captured in the ToI returns
submitted to the GDT. The implementation of the new
CGT regime aims to close this tax leakage arising from
capital gains transactions.
Capital gains:
Cambodia introduced a CGT regime through theissuance Prakas No.346, dated 1 April 2020. This CGT
regulation imposes 20% CGT on the capital gains
derived by resident physical persons and nonresidents (both legal and physical), with the exemption
applied to certain capital gains transaction. Based on
the new LoT, the resident persons will be subject to
CGT on the sale/transfer of capital both in Cambodia
and abroad while non-resident persons are subject toonly the sale/transfer of capital in Cambodia.
The term “capital” refers to immovable property,
financial lease, investments assets (including shares,
bonds, and other securities), goodwill, intellectual

34

Investing in Cambodia 2024

1. sale or transfer of ownership of assets;
2. registration of the transfer of ownership with thecompetent authority; or
3. final verdict of a court on the transfer of property.
For immovable properties, taxpayers have the option
to deduct costs amounting to 80% of the sale price or
the actual cost. For other capital gains transactions,only the actual cost can be claimed as a deduction. A
capital loss is not allowed for a refund or carryforward, and not allowed as a deduction/offset against
other capital gain transactions.
The 2023 New LoT has adopted the scope andlanguage regarding the imposition of CGT on capitalgains derived by non-residents and resident physicalpersons. However, as of date, the GDT has yet toprovide further guidelines on the implementation of
the CGT regime by 1 January 2024.

© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Tax incentives
The Council for the Development of Cambodia (CDC)
is the principal government agency responsible forproviding incentives to stimulate investment in
Cambodia. Investors are required to submit an
Investment Proposal to either the CDC or theProvincial-Municipal Investment Sub-committee(PMIS) to obtain Qualified Investment Project (QIP)
status depending on the amount of capital investment
and location of the investment project in question.
The government also provides incentives to specificindustries and/or activities to promote business inthose sectors. Incentives were also provided by thegovernment to certain industries heavily impacted by
the COVID-19 pandemic, among others.

Option 2:• Deduction of capital expenditure through special
depreciation as stated in the tax regulations in force;• Eligibility of deducting up to 200% of specificexpenses incurred for up to 9 years;• Prepayment tax exemption for a specific period oftime basedof time-based;• Minimum tax exemption, provided that an
independent audit report has been carried out;
• Export tax exemption, unless otherwise provided inother laws and regulations

QIP-registered Enterprises
In addition to the incentives stated above:
Certain investment incentives and/or guarantees are provided
QIP registered enterprises which are duly registered with the
CDC. Foreign and Cambodian investments can be eligible for
QIP registration, except those investment activities includedin the “negative list“ or those investment proposals whichhave been already received investment incentives under the
Law on Investment.

• Export QIP and supporting industry QIPs are entitledto customs duty, special tax and value-added tax
exemption for the import of Construction Materials,
Construction Equipment, Production Equipment, andProduction Inputs.

Investment activities registered as QIP are entitled to choose
basic incentives under either of the following two options:• Domestically oriented QIPs are entitled to customs
duty, special tax, and value-added tax exemption for
the import of Construction Materials andConstruction Equipment.

Option 1:• Income tax exemption for 3 to 9 years, dependingon the sector and investment activities, as well as
the period of income. After the income tax
exemption period has expired, the QIP is entitled to
pay income tax at a progressive rate proportional to
the total tax due as follows:–
25% for the first 2 years;– 50% for the next 2 years; and– 75% for the last 2 years;• Prepayment tax exemption during the income tax
exemption period;• Minimum tax exemption provided that an
independent audit report has been carried out;

Note that QIPs located in special economic zones areentitled to the same incentives and protections.
Additional Incentives
In addition to the basic incentives (i.e., Option 1 or 2)
provided to QIP-registered enterprises, investment
activities registered as a QIP will receive additional
incentives as follows:• VAT exemption for locally made production inputs
for the QIP activity;• 150% deduction on innovative and sustainable
activities, such as:• Export tax exemption, unless otherwise provided inother laws and regulations; or

35

Investing in Cambodia 2024

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member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

– Research and development (R&D), and innovation– Human resource development (e.g., vocational
training for Cambodian workers)– Construction of accommodation, food courts,
canteen, nurseries, and other facilities for workers– Upgrade of machinery to serve the production line
– Provision of welfare for Cambodian workers

There is also an incentive on similar terms provided to
paddy plantation, paddy purchase collection and riceproduction and higher educational institutes. This
incentive is administered by the GDT.
To be eligible however, those enterprises must ensure
their regulatory compliance as taxpayers in thefollowing areas:

Special Incentives
Any specific sector and investment activities having
high potential to contribute to Cambodia’s national
economic development may receive special incentives
to be set out in the Law on Financial Management
The investment incentives and/or guarantees provided
to a QIP-registered project may be transferred toanother entity, during mergers or acquisitions. Prior
application in writing to the relevant government
ministries/offices is required in to transfer suchincentives/guarantees.
The CDC requires all QIPs to apply for a Certificate ofCompliance (CoC) annually, to enable QIPs to continue
to receive the investment incentives granted under theinvestment licence.
Expansion of QIP
E The proposed Expansion of a QIP (EQIP) must be of
an existing QIP. Expansions of existing QIPs will beentitled to income tax exemptions for the QIP projects
based on the investment activity categories as follows:• 9 years for category one (high technology)• 6 years for category two (medium technology)• Maintain proper bookkeeping, declare and pay ToI,
fulfil other tax obligations, and• Submit an independent audit report to the tax
administration annually (by three (3) months of thefollowing tax year).
Note that Garment and footwear manufacturing
enterprises (i.e., QIP) also receive tax incentives in theform of a suspension of the monthly PToI until 2025.
Special Economic Zones (SEZs)
Generally, investors (QIP) located in SEZs are entitledto the same incentives and privileges as other QIPs.
However, SEZs provide a one-stop service via theSpecial Economic Zone Administration. Special
customs procedures (simpler and quicker formalities)
are also applied in SEZs. In addition, other incentives
may apply.
Entertainment industry
Enterprises operating in the Khmer film productionindustry shall receive five years (from 2019 to 2023) of
the following tax incentives:• Suspension of 15% WHT on royalty for rights toscreen Khmer movies, produced domestically.

• 3 years for category three (low technology)• Suspension of ToI for enterprises producing
Khmer films.

Cut Make Trim services
QIPs which provide Cut Make Trim (CMT) services on acontract basis for the purpose of export can receive thesame incentive for ToI as if it were a QIP activity. These
enterprises must comply with certain conditions suchas notifying every CMT transaction within 30 days after
entering a contract and attaching the contract;
maintaining proper accounting records and sufficient
supporting documents as required.

36

Investing in Cambodia 2024

Enterprises wishing to obtain the tax incentives must
be in compliance with tax registration, accounting, andother tax obligations.
Education Sector
Eligible education institutions include private and public
institutions that provide purely educational services© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

from kindergarten through the university level andother technical and professional training institutions
may avail of the following incentives until 2023:• Attach a list of suppliers who declare VAT, as
specified, are required to make their monthly VAT
return; andThe abovementioned incentives may be revoked if the
taxpayer fails to comply with its monthly and/or annual
tax compliance obligations, including the keeping ofproper accounting records, submission of audited• Maintain accounting records in accordance withlaws and provisions in effect.

Tax Type

Tax Incentive

MT, PToI

Suspension of 1% MT and 1% PToI

ToIFree or discounted scholarship for students
shall not be considered as taxable income

WHT

WHT exemption on payments for
management, consultation, or other similar
services relating to the student’s study

VAT

Education services and other supplies of goods
or services relating to education, including foodand accommodation, shall be treated as
non-taxable supplies.

Small and medium enterprises (SMEs) in priority
sectors
Qualified SMEs in the priority sectors (e.g., agriculture,
food production, manufacturing of consumer goods forthe tourism sector, innovative IT services, SMEs
located in SME cluster) can avail of the following
incentives:
To obtain these SME tax incentives, applicabletaxpayers shall apply to the GDT by filing an application
form either via an online system or downloaded fromTax Type

Tax incentive

Periodfinancial statements, and timely payment of tax.
Agricultural Enterprises•
ToI• Obtain a certificate of VAT as state-charge from theGeneral Department of Taxation with a 1-year validity;•

200% of expenses on
training•

150% of investments
in machine ortechnical

Expenses should relate
to improvements and/or
modernising the SME’s
IT accounting systems,
training for accounting
or technical skills of
employees, or purchaseof equipment which isinnovative to improve
efficiency/productivity

MT, PToI exemption

the GDT website, print out the completed form andrequired documents to submit to the tax
administration.

Tax Type

Tax Incentive

VAT

Supplies of goods or services to agriculture enterprises
shall be considered VAT-state charged

WHT

15% WHT exemption on service payments to
non-VAT registered local suppliers

MT

MT exemption, provided enterprises maintainproper accounting records

Investing in Cambodia 2024

MT, PToI

located in the “SME
cluster”

3-5 years
Additional deduction:• 200% of expenses on
IT accounting
systems• Enterprises must fulfil the following conditions to
obtain the tax incentives:

37

Qualified SMEs meetingany of the ff:• uses 60% raw
material from local
sources• employs 20% more
staff

ToI Exemption

Agricultural enterprises that domestically produce,
supply or export rice, corn, bean, pepper, cassava,
cashew nuts and rubber, shall receive certain tax
incentives until 2023.

Conditions© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

International tax
Cambodia’s entry into Double Tax and Trade Agreements and a key
focus of Revenue authorities on related party transactions (TP) places
a greater burden on taxpayers to ensure sound compliance while
seeking to obtain effective strategic planning.“
Andrea Godfrey
Partner
Head of Integrated International Tax

Double Tax Relief

residency to gain benefits fromthe DTAs themselves in thepartner countries.

A foreign tax credit is available to aresident in respect of foreign taxes
paid, subject to certain conditions.

Bilateral Investment
Agreements

Double Tax Avoidance (DTA)
agreements
As at the date of this report,
Cambodia has DTA agreements ineffect with Singapore, China, Brunei,
Thailand, Vietnam, the Hong Kong
Special Autonomous Region,
Indonesia and Malaysia.
Cambodia has also signed DTA
agreements with South Korea which
as at the date of this Publication are
still awaiting ratification.
The GDT issued rules andprocedures for the implementationof the DTAs. Cambodian resident
taxpayers shall submit requests torelevant departments of the GDT to
apply preferential tax rates as per the
DTAs (i.e., 10% WHT) for suppliers/
vendors from partner countries andthey can apply for a certificate of38

Investing in Cambodia 2024

Cambodia has signed bilateral
investment treaties (BITs) with
Austria, Belarus, Bangladesh,
China, Croatia, Cuba, Czech
Republic, Democratic People’s
Republic of Korea, France,
Germany, Hungary, India,
Indonesia (later terminated),
Japan, Kuwait, Laos, Malaysia, theNetherlands, Pakistan, thePhilippines, the Republic of Korea,
Russia, Singapore, Switzerland,
Thailand, Vietnam, and theOrganisation of the Petroleum
Exporting Countries.
Future agreements are plannedwith Algeria, the BelgiumLuxembourg Economic Union,
Bulgaria, Egypt, Hungary, Israel,
Iran, Libya, Macedonia, Malta,
Qatar, Turkey, the United
Kingdom, and Ukraine.

Cambodia has also signed several
regional Free Trade Agreements
including:• ASEAN-Australia New Zealand;• ASEAN-Hong Kong, China;• ASEAN-Republic of Korea;• ASEAN-Japan;• ASEAN-India;• ASEAN-China and ASEAN
Investment Comprehensive
Agreement;• Cambodia is also negotiating
China Investment Promotion andProtection Agreement; Regional
Comprehensive Economic
Partnership Agreement (RCEP);
and ASEAN-Republic of Korea
Investment Agreement under
the Framework Agreement.
Cambodia has signed a Trade andInvestment Framework Agreement(TIFA) with the U.S. to promote
greater trade and investment inboth countries and provide a forum
to address bilateral trade andinvestment issues.

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Anti-avoidance Rules
Introduction
Article 194 of the 2023 LoT has
introduced a “general antiavoidance” provision in the
Cambodian tax law by providing
the GDT explicit power to reject orre-determine the real elements ofany transactions in case thetaxpayer is found to havesubmitted false information with
the intention to reduce or
eliminate the tax payable. It
remains to be seen how thisprovision will be enforced in actual
practice.
Transfer Pricing
Transfer Pricing (TP) – Cambodia
Backgroundtransactions need to occur
between a Cambodian taxpayer
and a related party. A related party
is generally defined in Article 4 of
Prakas 986 as one of the following:• Any member of the taxpayer’s
immediate family;• An entity which directly or
indirectly controls 20% of theequity interest in another entity
either through entitlement todividends or equivalent voting
rights;• Any two entities which are
under common control, whereby
an individual has 20% of theentitlement to dividends orequivalent voting rights.

Since 1997, Article 18 of the LoT
in Cambodia has allowed theGeneral Department of Taxation(GDT) to make adjustments toincome and expenses between
Cambodian taxpayers andoverseas related parties.

In accordance with Prakas No.
986, there are five (5) Transfer
Pricing methods allowable:

On 10 October 2017, the Ministryof Economy and Finance indicatedthat related party transactions
would be subject to greater
scrutiny in Cambodia, by issuing
Prakas 986, which became
effective immediately.

3. Cost Plus Method (CPM),

Prakas 986 provides rules andguidance on acceptable TP
methodologies and therequirement for formal supporting
documentation, thus providing
additional clarity and transparency.
For Prakas 986 to apply,

39

Investing in Cambodia 2024

1. Comparable Uncontrolled Price(CUP),
2. Resale Price Method (RPM),
4. Transactional Net Margin
Method (TNMM), and
5. Profit Split Method (PSM).
Prakas 986 – The Intention
The purpose of TP rules is toensure related party transactions
are undertaken at an amount andin a manner that corresponds withwhat non-related parties would
pay for the goods or services andhow the transaction would be
conducted (i.e., an “arms-length”
transaction).

This further aligns Cambodia withinternational fiscal policy and theOrganisation for Economic
Co-operation and Development(“OECD”) guidance on the
conduct of related party
transactions. However, Cambodia
is not an OECD member andtherefore is not bound by theOECD Guidelines.
The overall aim is to prevent
related parties from shifting profits
to minimise tax exposure.
The comparison to a non-related
party transaction is however not
an exact or precise exercise, and,accordingly, a detailed review andanalysis of each transaction must
be undertaken.
Prakas 986 – TP Compliance• Prakas 986 outlines newcompliance requirements
generally consisting of:a. The retention of annual
documentation, which theCambodian taxpayer must
submit to the GDT uponrequest. This documentation
should detail related party
transactions and the TP
methodologies used to justify
the value of the transaction;b. An annual reporting
requirement, whereby
Cambodian taxpayers whotransact with related parties
must state if they have TP
documentation completed
and declare related party
transactions for the fiscalyear.

© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Prakas 986 – Timeline & Penalties
for non-compliance• Prakas 986 is effective from thesigning date of 10 October 2017,
however, there is no official
confirmation on the first fiscal
year it should be applied. It ishighly likely that the GDT will
only require TP documentation
for the 2018 year and onwards.
• Consequences for lack ofcompliance may be as follows:a. Withdrawal of taxpayer’s
certificate of tax compliance;
b. GDT TP adjustment, resulting
in additional tax;c. Tax penalties, ranging from
10% to 40% of any additional
tax arising from any adjustment
made, plus an interest chargeof 1.5% (per month).;d. Criminal charges(imprisonment or further
monetary punishment);e. High risk of unilateral
assessment/ deemed
assessment.
Permanent Establishment (PE)A PE is defined in Cambodia as “a40

Investing in Cambodia 2024

fixed place of business in theKingdom of Cambodia, the branchof a foreign Company or an agent
resident in the Kingdom of
Cambodia, through which a
non-resident person carries on
their business. The term PE also
includes any other association orconnection through which a
non-resident person engages in
economic activity in the Kingdomof Cambodia”. Based on the new
LoT, the term PE was also
expanded to include any person
who has or habitually exercises
the authority to sign the contract
in the name of the non-resident
person or fulfils the main role infacilitating the conclusion of acontract.
On the other hand, the PE
definition under Prakas 098
covering non-resident online
businesses providing goods orservices in Cambodia was
excluded from the PE definition
under the 2023 LoT.
Cambodia’s PE definition adopts
the definition laid out under theinternational tax laws, practices,and principles on PE under theOECD and the UN Model
Convention. However, Cambodia’s
PE definition does not include an
exemption on “preparatory andauxiliary activities” under theOECD and UNMC. This leaves the
GDT a wider scope to assess PE
issues on foreign companies doing
business in Cambodia, based on
the PE criteria. Under the Tax Law,
the GDT has the discretion todetermine if, in its opinion, a PE
exists.
Thin Capitalisation
There is no specific thincapitalisation legislation but there
are limitations on the deductibilityof interest (see 1. Taxation ofCompany). A specific Debt: Equity
ratio requirement exists for the
petroleum and mineral sectors.
Controlled Foreign Company(CFC) Provisions
There is no CFC regime in
Cambodia.
Country-by-Country Reporting(CbCR)
There is no CbCR requirement for
multinational enterprises in
Cambodia.

© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Foreign exchange control
All matters relating to the management of foreignexchange are carried out by the NBC. Although the
KHR (Khmer Riel) is the official currency of Cambodia,
the US dollar is in common circulation and the majority
of commerce is denominated in US dollars.

There are no restrictions on the establishment offoreign currency bank accounts in Cambodia forresidents.

There are currently no restrictions on the repatriationof profits or capital from Cambodia, and the law
guarantees the rights of foreign investors to remit
foreign currencies abroad for:
• The payment of imports and repayment of principal andinterest on foreign loans• The payment of royalties and management fees
• The remittance of profits; and• The repatriation of invested capital on the dissolution of
an investment project.

The Foreign Exchange Law of 1997 provides forforeign currencies to be freely purchased via thebanking system. In particular, the law states that there
should be no restrictions on foreign exchange
operations. However, these operations can only be
performed through an authorised financial institution.
It should be noted that the law does provide for the
NBC to implement exchange controls in the event of aforeign exchange crisis.

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member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

We have an obligation to support our community – while
helping businesses of all sizes to drive sustainable andmeasurable change. The demand for robust disclosures inEnvironmental, Social and Governance (ESG) is growing.
One of our professional obligations is to work with ourclients to deliver ESG services that serve the public
interest. This is clearly aligned with our purpose which is
to inspire confidence and empower change.

Nge Huy
Senior Partner
Head of Audit

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member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

43

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member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Audit Services
1

Financial Statement Audit

Good audits add value beyond the formal financial
statements.
Independent financial statement audits enhance thereliability of the information provided by companies toinvestors, creditors, and other stakeholders inaccordance with statutory requirements. In themarketplace, credible financial statement audits
reinforce investor confidence. Within organisations,they add to the board and management understandingof the business and the risks it faces.

2

Regulatory Audit

3

Accounting Advisory Services

4

Audit Related Services

Regulatory Audits assist with a range of complianceobligations by conducting independent audits andreviews of financial information and data.

5

International Financial ReportingStandards Audit Data & Analytics

Audit-Related Services offer completion audits,
agreed-upon procedures, internal control reporting,and compliance audit assistance.

6

Audit Data & Analytics

Integrity, quality, and independence are the building
blocks of KPMG's approach. Our audit process does
more than just assess financial information. It enables
our professionals to consider the unique elements ofthe client's business - its culture, the industry in which
it operates, competitiveness, pressures, and inherent
risks.
KPMG’s member firms have developed a globallyconsistent audit methodology that is designed to focus
on the key areas of risk, based on a company’s
operational characteristics and performance profile.
Our partners and professionals are trained to lookclosely at all aspects of financial reporting, so they are
better able to isolate risk.
Financial Statement Audits play a critical role increating and maintaining investor confidence and canunlock valuable insights into the business.

44

Investing in Cambodia 2024

In addition to the traditional financial statement audit,
most organisations experience the need forindependent, objective assurance of financial
information, transactions, and processes. Independent
assurance and verification add credibility to anorganisation’s disclosures and reporting, particularly
when it is not a statutory requirement.
Audit Data and Analytics unlock the data in yourbusiness and deliver insight to help enhance audit
quality.
Adding value to audit and confidence inassurance
KPMG’s CLARA – powered by D&A – is raising the bar
on audit quality by enabling us to test complete data
populations and understand the business reasons
behind outliers and anomalies. Automated audit
capabilities let our people focus on the higher-riskareas of the audit. The enhanced business insights
delivered to you by our audit team help you see yourbusiness from a fresh perspective and stay ahead of
the competition.

© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

How we can help
KPMG is working with organisations around the world
to help them deal with complex questions arising fromthe adoption of IFRS, such as:

Nge Huy
Senior Partner
Head of Audit
KPMG in Cambodia

Phor Auvarin
Partner
Audit Services
KPMG in Cambodia

Taing Youk Fong
Partner
Audit Services
KPMG in Cambodia

Guek Teav
Partner
Audit Services
KPMG in Cambodia

Yim Lundy
Director
Audit Services
KPMG in Cambodia

Phour Sothy
Directior
Audit Services
KPMG in Cambodia

Chhay Boraniel
Director
Audit Services
KPMG in Cambodia

Low Sehkit
Director
Audit Services
KPMG in Cambodia

How will IFRS affect reported business performanceand how will the consequences of this change becommunicated effectively, both internally and to theexternal market?
What are the potential benefits of adopting IFRS, andhow can they be realised?
What experience and resources will be required for a
successful IFRS conversion?
How should organisations manage the conversion to
IFRS?KPMG is helping organisations adopt IFRS,
providing practical support to smooth the transition.

International Financial Reporting Standards are

generally accepted by users in a large number ofcountries around the world.
Growing numbers of companies and organisations in
Cambodia are adopting International Financial ReportingStandards (IFRS). The benefits of IFRS include
enhanced comparability and improved transparency offinancial reporting. IFRS financial statements are
generally accepted by users in a large number ofcountries around the world. These are absolute
requirements to gain access to the international capital
market. KPMG has been assisting clients both inCambodia and internationally to interpret andimplement these standards.

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Investing in Cambodia 2024

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member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Tax Services
1

Corporate Income Tax and International
Corporate Tax

2

Tax Audit Assistance3

Tax Retainer

4

Tax Health Check Review

5

Tax Compliance Training

6

Indirect Taxes

With our vast experience in tax audits, KPMG not
only provides your businesses with practical advice on
any tax audit issues but our team is also ready tosupport you in liaising with the tax auditors on various
occasions, including but not limited to preparing
administrative letters, attending the tax audit
meetings, and lodging all the relevant documents withthe tax authorities. Our team of specialists has
extensive experience in assisting clients to resolve tax
disputes whilst maintaining an effective working
relationship with tax authorities on your behalf.

7

Global Tax Outsourcing

8Transfer Pricing and Supply Chain
Management

9Merger & Acquisitions

KPMG Cambodia’s Tax services are designed toreflect the unique needs and objectives of each client,
whether we are dealing with the tax aspects of across-border acquisition or developing and helping to
implement a global transfer pricing strategy. In
practical terms, this means that we work with ourclients to assist them in achieving effective tax
compliance and managing tax risks while helping tocontrol costs.

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Investing in Cambodia 2024

Our Corporate Income Tax and International
Corporate Tax team advises organisations on
domestic and international tax laws affecting local andcross-border transactions and other regulatory
matters, such as foreign investment rules andindustry-specific regulatory requirements as well as
domestic tax issues such as incentives, deductibility,
and corporate tax management. Our industry-focused,
experienced professionals provide tax advisory
services that are tailored to the needs of the industry.

KPMG’s tax retainer services are also available forbusinesses that need routine advice on technical,
regulatory compliance, and risk management strategy.
With our years of experience and our extensive
resources of information, we are your integral partner,
aiming to add more value to your businesses as weshare both international and national best practices.
Our tax health check review services provide highlevel and detailed tax review to undertake a tax
diagnostic review of your business's current tax
compliance position to identify any risks or exposuresthat currently exist. The review can also be used as aplanning tool to identify high-risk areas and develop a
strategy to minimise unnecessary tax exposures.
Our professional teams provide tax compliancetraining to guide your inhouse team to properly prepare
and file all types of compliance monthly tax returns.

© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Indirect Tax, such as VAT can be complex and costly. Indirect
Tax Team focus on effective indirect tax planning, compliance,and related cash flow management, helping companies
improve profitability and build stakeholder value.
In addition to tax advisory services, KPMG helps businesses
manage their tax compliance obligations. These obligations canrepresent a substantial outflow of funds from a business and adrain on management time due to increased reporting
requirements, greater scrutiny by tax authorities and harsher
penalties for non-compliance. Our Global Tax Outsourcing
group works with our KPMG offices internationally to assist
multinational groups to co-ordinate and comply with their tax
compliance obligations on a global basis.
KPMG’s Global Transfer Pricing Services (GTPS) network
comprises over 1,500 professionals from KPMG member firms
around the world who work together to provide local
knowledge, experience, and global analysis to assist
multinational companies in addressing their Transfer Pricing
responsibilities.
KPMG’s GTPS practice includes economists, tax practitioners,
and financial analysts. We use knowledge of local rules andhow they interact to help member firm clients source taxefficient pricing.

Tan Mona
Partner
Head of Corporate Tax
KPMG in Cambodia

Andrea Godfrey
Partner, Head ofIntegrated International Tax
KPMG in Cambodia

Nguon Socheata
Director
Tax & Coporate Services
KPMG in Cambodia

Song Kunthol
Director
Tax & Coporate Services
KPMG in Cambodia

Mom Rinsey Tola
Director
Tax & Coporate Services
KPMG in Cambodia

Sok Chanrasmey
Director
Tax & Coporate Services
KPMG in Cambodia

KPMG’s GTPS in Cambodia can assist you with each step ofyour Transfer Pricing strategy. Our Transfer Pricing advisory
services include:• Transfer Pricing planning• Transfer Pricing compliance support• Transfer Pricing controversy and dispute resolution
Merger & Acquisitions Tax (M&A Tax) professionals are
involved in providing tax advisory services in connection withcorporate restructuring, mergers and acquisitions, advising on
tax-efficient investment structures and conducting tax due
diligence.

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Investing in Cambodia 2024

© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Corporate Services
1Market Entry and Business Set-up

2

Corporate compliance3

Trade & Customs

4Intellectual Property

5

Employment and labour

6

Mergers and acquisitions

7

Restructuring and liquidation

8

Accounting system setup

9

Management accounts outsourcing

10

Financial audit assistance11

Payroll service

12

Our Corporate compliance team can assist you tocomply with the regulatory requirements for doing
your business in Cambodia, including the notifiablechanges of the business’ particulars, licensing andrenewal and annual filings with the authorities.

Accounting Advisory

All registered entities operating in Cambodia aresubject to corporate and accounting rules andregulations which require enterprises to apply for andmaintain a range of business and labour registrations
and licences and to prepare accounting records undera specified accounting framework.
Failure to obtain applicable business and labour
registrations and licences and to prepare accounting
records in accordance with the relevant accounting
regulations can lead to a number of problems forenterprises.
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Investing in Cambodia 2024

Our Market Entry and Business Set-up service
provides many opportunities for new investors but
also opens the door to unknown risks. Using an
integrated approach, our market entry services team isable to provide local knowledge regarding regulatory,financial, taxation and commercial issues to help
identify opportunities and manage risk.

Our Trade and Customs professionals advise clientson duties, planning and compliance-related obligations
when importing and exporting goods. They are alsoable to directly support clients during a Post Clearance
Audit (PCA) by providing advice, helping clients
document their position using available information,
and attending meetings together with the client and
the General Department of Customs and Excise.
Intellectual Property services can provide
enterprises in dealing with intellectual property related
advisory from both regulatory and practicalperspectives, mark registration, renewal as well as
appeal process against refusal, and registration of
exclusive rights agreements. KPMG Cambodia has adedicated and specialised team of professionals who
are licensed and recognised by the authorities toperform the services.
Our Employment and labour compliance team canassist you in navigating Cambodia’s complex labour
law regime to deal with any challenges and drive yourbusiness forward.
We advise on all employment issues arising in the
lifecycle of a company, from initially recruiting yourworkforce to establishing key human resources
policies, dealing with labour related matters,
terminations, and settling final obligations to youremployees in the context of a winding up.
Restructuring and liquidation, working alongside
KPMG’s tax, advisory and legal teams in Cambodia
and beyond, our clients receive integrated advice thattakes account of the full spectrum of tax, regulatory,
operational, and legal implications.
Mergers and Acquisitions (M&A), KPMG One Due
Diligence M&A team adds value at each phase of atransaction, protecting your strategic interests whether© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

you are selling or buying, planning a merger or about toembark on a business alliance. Applying an integrated
approach, we leverage the experience and expertise of
KPMG’s network around the world. KPMG Corporate
Services team works seamlessly with KPMG’s advisory andtax teams.
Cambodia is experiencing an ever-increasing demand forproper maintenance of management accounting records
and payroll processing, driven by factors including regulatory
requirements, audit requirements, and increases in foreign
investment.
KPMG is strongly positioned to meet this demand with our
Accounting team's wealth of experience providing highquality Accounting Services to our clients. Our Accounting
team advises clients on their Accounting System Setup
and configuration, follows through with Management
Accounts Outsourcing and provides training to our client’s
accounting staff.

Dary So
Partner
Head of Corporate Services
KPMG in Cambodia

Richard Joseph Nuttall
Director
Tax & Coporate Services
KPMG in Cambodia

Our team assists clients with basic reporting such asbalance sheets & profit & loss financial statements up todivisional or project analysis, budget variance reports andspecialised investor/ donor reporting. We can also provide a
Financial Audit Assistance service to act as the first portof call to the auditor, taking the pressure off you andenabling you to focus on running your business.
Our Payroll Services team has a history of providing expert
services to local and international entities operating in
Cambodia with both local and expatriate employees. These
services include but are not limited to, payroll calculation,
payroll reporting, calculation of historical and current
seniority liabilities, payslip preparation and the settlement ofother payroll-related liabilities through trust accounts.
Accounting Advisory Services bring a depth of knowledge
that combines financial reporting knowledge.
All organisations periodically face difficult financial reporting
and accounting issues, and the current economic climate isincreasing the challenges faced by businesses. In trying tosort through these issues on their own, organisations
typically waste time and resources. Good professional
advisers can strip away much of the uncertainty andconfusion which can surround the application of accounting
standards and reporting practices and enable relevant
commercial outcomes.

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member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Advisory Services
1

Merger & Acquisition (M&A)

Merger & Acquisition (M&A)
We offer integrated services across the lifecycle of an
acquisition.

2

Transaction Services

3

Restructuring Services

4

Strategies

Buy-side. The path to an acquisition is marked bymany challenges. As an experienced, independent
advisor, KPMG Deal Advisory helps guide clients
through each stage of a deal, enhancing value all along
the way. We help clients identify risks and rewards
through the entire acquisition lifecycle, and make surea deal fits clients’ broader strategic goals.

Business today is under more pressure than ever todeliver better, lasting results for stakeholders. At
KPMG, we think like an investor, looking at how
opportunities to buy, sell, partner, fund or fix a company
can add and preserve value. We provide services that
can help address a client’s strategic needs in terms ofgrowth (creating value), governance (managing value),and performance (enhancing value).

Sell-side. Getting the best value from a sale means
taking an objective look at the client’s business andassessing the agendas of prospective buyers. KPMG
Deal Advisory supports clients through each phase ofa sale, from identifying buyers to enhancing the valueof your retained business.
Transaction Services
We provide assistance to clients on mergers andacquisitions, particularly with respect to financial andcommercial due diligence, business valuation, analysis
of financial projections, cash flows, management
information, systems and controls, and staff
compensation. The team also provides vendor due
diligence and assistance for clients divesting theirbusinesses.
Restructuring Services
Managing a financial restructuring is one of themost challenging situations for a business leader. As

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member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

an objective third-party, KPMG Deal Advisory can help
clients with a range of assessment and planningneeds, from determining the urgency of liquidity
issues to finding appropriate restructuring options andcreating a restructuring plan. We work alongside
lenders, stakeholders, and all levels of management todevelop restructuring strategies that improve a
company’s balance sheet, profit & loss and cash flow.
We can provide background support to the executive
team and assist them in renegotiating their finances,providing a robust challenge to the business plan that
underpins their refinancing proposals.

James Roberts
Partner
Head of Advisory
KPMG in Cambodia

Operational Restructuring seeks to provide the skills
needed for turnaround planning and implementation to
restore profitability and build a platform for growth.
Strategies
Strategies – Funding. Access to financing isessential to realising a strategic plan, optimising capital
structure for growth, and driving value forstakeholders. KPMG Deal Advisory can help clients
implement the right financing strategies and accessthe right capital. To optimise our client’s business’s
capital structure and access funding, we support themthrough each stage of the process, from initial contact
to closing with the lender.
Strategies – Partnership. Business partnerships arean effective way to pursue a range of strategic
objectives. But they need constant care and attention.
KPMG Deal Advisory helps clients decide what type ofpartnership makes the most sense and works withthem to manage it profitably.

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member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Tech Consulting Services
1

Technology Risk Consulting

2

Cybersecurity

3

System implementation(ERP, CRM, HRM)

4Digital Innovation
Consulting

Improving business performance, turning risk andcompliance into opportunities, developing strategies,
and enhancing value are at the core of what we do forleading organizations.

KPMG’s Technology Consulting teams strive to deliver
business benefits from a broad range of technologies,
helping our clients develop high-performing IT functions
and leverage investments in current systems to deliversignificant business value.
Our expertise stretches across the entire IT spectrum,
which allows us to work with our clients and address
any of their business and technical challenges throughtechnology adoption.
Today’s environment is your disrupted world, and also
ours.
Advancing technology and changing business models
have transformed the rules and risks of the game.
Successful organizations, whether they are private
businesses or public sector entities, ought to continually
examine their performance, seek opportunities toenhance operational efficiency, and take advantage ofopportunities arising from technological innovation andchanges in consumer behaviors to stay competitive inthis ever-changing business environment.

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Investing in Cambodia 2024

Our Consulting practice can help our clients to takeadvantage of change – not simply reacting to it – andthat gives you the ability to transform disruptive forces
into measurable and sustainable value.

Our professionals combine strong technicalcapabilities with relevant industry experience and theability to offer practical advice which draws on
KPMG’s extensive domestic and International
resources and embrace cross-disciplinary approaches
to important business issues. We will work with ourclients as colleagues, shoulder-to-shoulder, until wedeliver the results that matter.
We are not just an IT Advisory –Technology Consulting
practice. Collectively we are a business consulting
practice with service offerings spreading acrossbusiness, Information Technology and Risk. The
services we provide to our clients usually combines
different elements from multiple service lines. This is
how we differentiate ourselves from competition andbest deliver value to our clients.
Our IT Advisory & Digital Innovation practice is uniquein the market. We are currently still the only team with
end-to-end capability from Digital Strategy to
Implementation, to Maintenance Services and finallyto Technology Risk services. Not only that, but ourteam is also supported by the wider Consulting
capability and Sector capability to delivertransformational values.
Our overall Tech Consulting services includes:
Technology Risk Consulting•

IRM in External Audit•

IT Internal Audit© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

•

IT Due Diligence•

IT assessment (with a business lenses)

Our largest service line is IRM (Information Risk
Management) in External Audit and our largest client is
our Audit practice.

Will Nguyen
Partner
Head of IT Advisory &Digital Innovation
KPMG in Vietnam & Cambodia

Cybersecurity•

Penetration testing & Vulnerability assessment•

Technical IT assessment•

Cyber Maturity Assessment•

Other specific work that relates to cybersecurity &IT infrastructure

Eng BunthachDirector
IT Advisory
KPMG in Cambodia

Our Cybersecurity professionals often work together
with another team, for example IRM or ERP in order tocompliment and assessment the in-depth technicalcyber expertise.
System Implementation & Digital Innovation
Consulting•

System review and assessment (Oracle, Microsoft
and SAP)•

System implementation (Oracle, Microsoft and
SAP)•

ERP, CRM, HRM, Bespoke•

Digital technology design & implementation

Our Tech Enablement services usually involve
designing and implementing some kind oftechnologies that will help the client to transform.

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member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Financial Management Consulting Services
1Enterprise Performance
Management (EPM)

2

Finance Transformation

With a global network of professionals, our Financial
Management teams in Cambodia help CFOs and seniorfinance executives make their finance function more
efficient, effective, and aligned to the overarchingbusiness strategy so that the organization can realize
and sustain value over the long term.

3

Cost Optimization

4

Corporate Treasury Management

We advise clients on how to use business intelligence
and analytics to access the right information at the righttime to make more effective business decisions. We
also advise clients on how to use technology andprocess improvement methodologies to transform theirfinance function, close their books faster, define theirfinance operating models and make finance operations
more efficient.
How we can help

5

Working Capital Management

6

Financial Benchmarking

7

Digital FinanceEnterprises are facing unprecedented change anddisruption that threatens their future survival. To adapt,organisations need to be equipped with the rightinsights at the right time. As demand for timely
insights grows, the finance function will need to beprepared to deliver accurate forecasts faster totranslate strategy into action.

Finance transformation programs consist of large scalefinance change, covering people, process, reporting andtechnology.
KPMG’s Financial Management Consulting team, withextensive expertise in various fields in Cambodia and a
globally developed and applied methodology, provides
comprehensive assistance to business in reviewing,
designing, implementing, and maintaining Financial
Transformation solutions, as well as enterprise
performance management.
The finance function needs to be aligned to thebusiness strategy and provide financial analysis andinsight to support corporate decision making, while also
meeting legal and regulatory requirements as a given.

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Enterprise Performance Management (EPM):

Our EPM generates business insights throughfollowing solutions:•

Planning, Budgeting & Forecasting (PBF)•

Multi-dimensional Profitability Model (MDP)•

Management Information System (MIS)

Finance Transformation:
Our finance transformation services can help clients totransform your finance function to deliver performanceefficiency, data-driven insights and value to yourorganization. Here are some of the ways KPMG helps
organizations with their finance transformation efforts:•

Financial Target Operating Model (FTOM)•

Standard Operating Procedure (SOP)•

Chart of Accounts (COA)© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Cost Optimization
Our cost optimization services use various methods,
leverage industry insights, and provide customized
service delivery to improve operational efficiency, as
well as manage and optimize costs for clients. We
identify cost optimization opportunities, generate aroadmap for potential cost optimization initiatives,present streamlined cost management policy andprocesses, and report on implementation support.

Luu Bao Lien
Partner
Head of Financial Management
Consulting, Head of Real Estate
KPMG in Vietnam & Cambodia

Corporate Treasury Management
Our solutions can support and help clients unlock
value in various aspects of treasury management
including financial risk management; cash and liquidity
management; payment solutions; treasury strategy,organisation and processes; treasury accounting andvaluations; and treasury systems and technology.
Working Capital Management
KPMG supports clients to rapidly identify andimplement opportunities to release cash from working
capital. We deliver tangible cash benefits which can beused for management of daily operations, funding
future growth or repaying debt.
Financial Benchmarking
KPMG’s benchmarking tool uses benchmarks licensed
from a global leader in business benchmarking andbest practices, which are updated regularly. We also
use a proven empirical evidence based approach to
conduct benchmarking projects that leverages ourglobal benchmarking Centre of Excellence.
Digital Financetechnology stack and a holistic approach involving
processes, platforms and behaviors across the front,
middle and back offices, charting the way from initialplanning to technology enablement to cultural change.

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Investing in Cambodia 2024

© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Risk Consulting Services
1

Financial Risk Management

2

Governance Risk &Compliance Services (GRCS)

3

Forensic

As businesses strive for sustainable long-term growth,having a sound strategic plan in place is key toanticipate and mitigate potential threats in the evercomplex risk landscape.
KPMG understands the growing concerns about bothfinancial and non-financial risks globally. We are here
to help multi-level industries ranging from banks andinsurance companies to other corporate and publicorganisations with key strategic decisions: reevaluate,
reimagine, and fortify approaches to risk management.

In Cambodia, organisation from various industries suchas banking and insurance as well as other large
corporate and small-medium enterprises faces similar
strategic and business pressures to achieve better risk
management at a desired cost level.
Bankers, Insurers and Capital Market practitioners facediffering views of relevant regulations frompolicymakers, i.e., National Bank of Cambodia(“NBC”), Cambodia Financial Intelligence Unit(“CAFIU”) and the of Ministry of Economic andFinance (“MEF”). Leveraging our multidisciplinaryinternational and local-based experts, we are at theforefront of the ever-changing regulatory requirements
and expectations which take time to track and counter
firms’ desire for global policies.
Financial Risk Management (“FRM”) have probably
never been more acute. Capital reserves, credit
portfolios, investment policies and capital and debt
profiles all demand constant scrutiny to adequately
manage and mitigate risk. The dynamic enrichment ofcredit, market and operational risk-related Prakas all
focuses on tracking the Basel Framework’s trifecta,
capital adequacy requirements, supervisory review
and market discipline.
The stakes in managing model risk have never been
higher. Financial Institution's reliance on provisioning
and credit scoring models have proved to improvebusiness needs, including financial reporting, pricing
and strategic planning. In addition, the increase of big
data and advanced analytics needs to drive theexploration of more sophisticated models, such as
customer relationship management or anti-money
laundering (“AML”) and fraud detection.
The representative of proper governance and internal
control of an organisation is defined within its’ threelines of defence. Our Governance, Risk andCompliance Services (“GRCS”) professionals help
sharpen organisations’ abilities to successfully manage
risk and further contextualise value creation. We assist
our clients in developing proper frameworks andstandard operating procedures as well as lending a

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Investing in Cambodia 2024

© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

helping hand to Internal Audit departments inexecuting the annual audit plan via outsourcing or
co-sourcing arrangements.
Cambodia’s effort in strengthening measures andexiting the international AML watchdog’s ‘grey’ list is awork in progress and every organisation plays a crucialrole. Furthermore, organisations face constant struggle
to detect and manage AML and fraud risk. Our
Forensic (“FOR”) services can assist in formulating
an internal monitoring strategy and easing reportingpressure from external parties.
Our overall Risk Consulting services includes:

Truong Hanh Linh

Partner
Head of Risk ConsultingHead of ESG
KPMG in Vietnam &Cambodia

Rocky Lim

Director
Risk Consulting Services
KPMG in Cambodia

FRM• Regulatory Capital Risk-Weighted Assets Advisory• Internal Rating Based (IRB) Implementation under Basel II/III• Asset and Liability (ALM) & Fund Transfer Pricing (FTP)• Liquidity Risk Management• Operational Risk Framework• ICAAP Implementation and Independent Review• CIFRS 9 Expected Credit Loss Implementation• Effective Interest Rate (EIR) Implementation• Credit Scorecard Implementation• Revenue Enhancement (RAROC. RAPM)• Digitisation• Data Warehousing & Data Governance

GRCS• Corporate Risk Governance Framework• Standard Operating Procedure (SOP) Standardisation &Development• Internal Audit Capabilities Enhancement• Internal Audit Services – Outsourcing/ Co-sourcing• Enterprise Risk Management (ERM)• Compliance Function

FOR• Anti-Money Laundering (AML)• Customer Due Diligence (CDD) / Know Your Customer (KYC)• Sanctions Screening• Transaction Monitoring (TM)• Anti-Fraud / Fraud Risk Management• Third Party Risk Management• Anti-Bribery and Corruption (ABAC)

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Investing in Cambodia 2024

© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Glossary
ADCE

Annual Declaration of Commercial Enterprise

EBA

Everything But Arms

ATDD

Advance Tax on Dividend Distribution

EU

European Union

AT

Accommodation Tax

GDTGeneral Department of Taxation

ATIGA

ASEAN Trade in Goods Agreement

GSP

Generalised System of Preferences

BPS

Business Performance Services

GTI

Grand Twins International (Cambodia) Plc

CAAR

Cambodian Accounting and Auditing Regulator

GTPS

Global Transfer Pricing Services

CDC

Council for the Development of Cambodia

HKL

Hattha Kaksekar Limited

CFC

Controlled Foreign Company

IARCS

Internal Audit, Risk Consulting Services

CFRSNPO

Cambodian Financial Reporting Standards for Non-Profit
Organisations

IASB

International Accounting Standard Board

CIFRS

Cambodian International Financial Reporting Standards

IFRS

International Financial Reporting Standards

CIFRS for
SMEs

Cambodian International Financial Reporting Standards for Smalland Medium-sized Entities

KHR

Khmer Riel

CIT

Corporate Income Tax

KICPAA

Kampuchea Institute of Certified Public Accountants andAuditors

CGT

Capital Gains Tax

KRX

Korea Exchange

CoC

Certificate of Compliance

LALoI

2003 Law on Amendment on the Law on Investment

CSX

Cambodia Securities Exchange

LoFM

Law on Financial Management

CTA

Committee for Tax Arbitration

LoI

1994 Law on Investment

DTA

Double Tax Agreements

LoT

Law on Taxation

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Investing in Cambodia 2024

© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

M&A

Mergers & Acquisitions

QIP

Qualified Investment Projects

MEF

Ministry of Economy and FinanceR&D

Research & Development

MFN

Most Favored Nation

RO

Representative Office

MPTC

Ministry of Post and Telecommunications

SAR

Self-Assessment Regime

MLVT

Ministry of Labour and Vocational Training

SECC

Securities and Exchange Commission of Cambodia

MoC

Ministry of Commerce

SOE

State-Owned Enterprise

NAC

National Accounting Council

ST

Specific Tax

NBC

National Bank of Cambodia

TIN

Tax Identification Number

NSSF

National Social Security FundTIP

Tax on Immovable PropertyPAS

Sihanoukville Autonomous PortToI

Tax on Income

PE

Permanent Establishment

ToS

Tax on Salary

PMIS

Provincial-Municipal Investment Sub-committee

TP

Transfer Pricing

PPAP

Phnom Penh Autonomous PortTPL

Tax for Public Lighting

PPSP

Phnom Penh SEZ Plc

USUnited States

PWSA

Phnom Penh Water Supply Authority

VAT

Value Added Tax

PSC

Production Sharing Contract

WHT

Withholding Taxes

PToI

Prepayment of Tax on Income

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Investing in Cambodia 2024

© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Contact us
Cambodia
Phnom Penh

35th Floor, GIA Tower,
Sopheak Mongkul Street, Diamond Island,
Sangkat Tonle Bassac, Khan Chomkarmon,
Phnom Penh, Kingdom of Cambodia
T +855 (17) 666 537 | +855 (81) 533 999

Scan to visit our website: kpmg.com.kh
Email: info@kpmg.com.kh

The information contained herein is of a general nature and is not intended to address thecircumstances of any particular individual or entity. Although we endeavour to provide accurate andtimely information, there can be no guarantee that such information is accurate as of the date it isreceived or that it will continue to be accurate in the future. No one should act on such information
without appropriate professional advice after a thorough examination of the particular situation.
© 2024 KPMG Cambodia Ltd., a Cambodian single member private limited company and a member
firm of the KPMG global organization of independent member firms affiliated with KPMGInternational Limited, a private English company limited by guarantee. All rights reserved.
The KPMG name and logo are trademarks used under license by the independent member firms of
the KPMG global organization.