Dezan Shira in Cambodia

Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. With more than two decades of on-the-ground experience and a large team of lawyers, tax experts and auditors, in addition to researchers and business analysts, we are your partner for growth in Asia.

Our Latest ASEAN Briefing Magazine

Regional Intelligence: Cambodia

The Khmer Empire reached its zenith between the 10th and 13th centuries when it dominated most of Southeast Asia, accumulating immense power and wealth. After a long period of decline, Cambodia came under French protection in 1863, becoming part of French Indochina in 1887. Following Japanese occupation in World War II, Cambodia gained full independence in 1953. Communist Khmer Rouge forces captured Phnom Penh in 1975 and evacuated all cities and towns. At least 1.5 million Cambodians died from execution, forced hardships, or starvation during the Khmer Rouge regime. In November 1978, Vietnamese troops invaded Cambodia, driving the Khmer Rouge into the countryside and touching off almost 13 years of civil war. The 1991 Paris Peace Accords mandated democratic elections and a ceasefire. UN-sponsored elections in 1993 helped restore some semblance of normalcy under a coalition government. A second round of national elections in 1998 led to the formation of another coalition government and renewed political stability.

Garments, construction, agriculture, and tourism are driving Cambodia’s economy, with GDP climbing more than seven percent per year between 2010 and 2013. The garment industry currently employs about 400,000 people and accounts for 70 percent of Cambodia’s total exports. Oil deposits were discovered beneath Cambodia’s territorial waters in 2005, leading to another possible revenue stream for the government and foreign direct investment interest if commercial extraction is possible. Mining also is attracting investor interest including opportunities for mining bauxite, gold, iron, and gems. The tourism industry also continues to grow rapidly, with foreign arrivals exceeding two million per year since 2007 and reaching over three million visitors in 2012, many drawn by the UNESCO World Heritage Site Angkor Wat.

Despite all of this, Cambodia remains one of the poorest countries in Asia and long-term economic development will continue to be stymied by endemic corruption, limited educational opportunities, high-income inequality, and poor job prospects. More than 50 percent of the government budget comes from donor assistance, and the major economic challenge for Cambodia over the next decade will be fashioning an economic environment in which the private sector can create enough jobs to handle Cambodia’s demographic imbalance. It currently takes around 101 days to set up a business in the country.

Cambodia has 22 special economic zones (SEZs) including one in the capital, Phnom Penh, and four around the Sihanoukville Port Area. The authority responsible for Cambodia’s SEZs is the Cambodia Special Economic Zone Board, which operates under the umbrella of the Council for the Development of Cambodia.

Foreigners are generally required to obtain a visa in order to stay in Cambodia. Visas can be obtained either in the visitor’s home country or on arrival in Cambodia. There are two types of visas:

  • Tourist Visa
    • Valid for 30 days after moving to Cambodia
    • Can be extended for one month
  • Business Visa
    • Valid for 30 days after moving to Cambodia
    • Work permits
      There is much debate over whether a work permit is necessary to allow a foreigner to work in Cambodia. The government’s regulations are quite unclear on this point, and many foreigners find that they are able to work in the country with just a Business Visa. It is therefore recommended that a professional services firm be contacted in order to ensure that your move to Cambodia goes smoothly. In order to receive a work permit, the foreigner’s employer must submit an application to the Ministry of Interior. Cambodia has two types of work permits:
  • Temporary work permits
    • For most regular expats
    • Duration is the same as the length of the individual’s visa
  • Permanent work permits
    • Generally reserved for major investors and those with government connections

The Cambodian government allows for three types of investment, they are as follows:

  • Limited Liability Company
    • This can be in the form of “private limited companies” or “public limited companies”.
  • Partnership
    • An enterprise formed through the creation of a contract between two or more persons.
  • Sole proprietorship
    • An enterprise established and operated by a single natural person who owns all of its capital.
  • Foreign Business
    • A legal entity formed under the laws of a foreign country where it has a place of business and is currently conducting business in Cambodia using one of the following forms:
      • Commercial representative office, commercial relations office or agency (“representative office”)
      • Branch
      • Subsidiary

Corporate Income Tax/Tax on Profit

  • Rate: 20 percent.
  • Residence: To be classified as a resident, the business must make Cambodia its principle place of business or conduct the majority of its operations in the country. In the case of a non-resident, only that income which is earned within Cambodia will be subject to corporate income tax.
  • Compliance: There is a self-assessment system for filing CIT/ToP returns. Returns are due on March 31 of the year following the income tax year and are filed annually.
  • Incentives: There are a number of investment incentives provided by Cambodia that are available to all sectors not on the “negative list.” Incentives can include CIT/ToP and import duty exemptions.

Indirect Tax

  • Rate: The VAT rate currently stands at 10 percent. Certain goods are zero-rated, such as goods for export, and other goods are exempt.

Individual Income Tax

  • Rate: The top rate stands at 20 percent.
  • Every month, the employer must pay 0.8 percent of the average wage of their employees into the National Social Security Fund.


You can find extensive collection of Cambodia’s tax treaties from our Knowledge Sharing Platform.