Simple Tax Guide for Americans in Cambodia
US Expat Taxes - Cambodia
At Taxes for Expats we have been preparing U.S. tax returns for U.S. Citizens and green card holders working in Cambodia for over 8 years. Our clients hail from all parts of the country - Phnom Penh and Batdambang, Siem Riep and Sihanoukville, Pailin and Kampong Chhnang.
As a U.S. Citizen or green card holder you are legally required to file a U.S. tax return each year regardless of whether you already pay taxes in your residence country.
We offer professional tax services. That means we figure out the best and most optimal way to file your U.S. tax return and avail you of all possible exclusions and deductions. But just as importantly - avoid the errors that would allow IRS to disallow your return and levy fines & penalties on top. You can also do them yourself - not that we recommend it. For more information please see IRS.
The expatriate Foreign Earned Income Exclusion can only be claimed if you file your tax return on a timely basis. It is not automatic if you fail to file and can even be lost.
We have many clients living in Egypt and know how to integrate your U.S. taxes into the local income taxes you pay. Any Egyptian income tax you already pay can be claimed as against the tax liability on your U.S. return on the same income.
As an expat living abroad you get an automatic extension to file until June 15th following the calendar year end. (You cannot file using the calendar year as is standard in Egypt for U.S. tax purposes). You must, however, pay any tax that may be due by April 15th in order to avoid penalties and interest. You can get an extension to file (if you request it) until October 15th.
There are other forms which must be filed if you have foreign bank or financial accounts; foreign investment company; or own 10% or more of a foreign corporation or foreign partnership. If you do not file these form or file them late, the IRS can impose penalties of $10,000 or more per form. These penalties are due regardless of whether you owe income taxes or not.
We have helped hundreds of expats around the world catch up with their past U.S. taxes because they have failed to file U.S. tax returns for many years. This is, in fact, our specialty and we offer a 10% discount to clients to wish to file multiple tax returns at once and get in full compliance with the IRS.
Work with a recognized expert to help you prepare your American tax return. We can also provide tax planning and advice with other expatriate tax; we look forward to working with you.
Personal Income Tax in Cambodia
Below we include information on the Cambodian Tax System for the American Expatriates.
Cambodia Tax on Salary rates are progressive, between 0% - 20%.
|Monthly Salary (KHR)||Tax Rate %|
|From 0 riels to 1,200,000 riels||0%|
|From 1,200,001 riels to 2,000,000 riels||5%|
|From 2,000,001 riels to 8,500,000 riels||10%|
|From 8,500,001 riels to 12,500,000 riels||15%|
|Over 12,500,000 riels||20%|
A Cambodian resident taxpayer's worldwide salary will be subject to Cambodian Tax on Salary. For nonresidents, only the Cambodian sourced salary will be subject to Tax on Salary. The place of salary payment is not relevant in determining source.
Residency: A Cambodian resident taxpayer includes any physical person who:
- has residence in Cambodia, or
- has a principal place of abode in Cambodia, or
- is physically present in Cambodia for more than 182 days in any 12 month period ending in the current tax year.
Cash salary tax rate for nonresidents is a flat 20%. This constitutes a final tax.
As the Tax on Salary rate scales are stated in Cambodia Riel, earnings in foreign currency have to be translated into Cambodian Riel. Official exchange rates are provided for this purpose.
Employers must make monthly Tax on Salary declarations and payments not later than the 15th day of the succeeding month. There is no annual return.
Tax Relief: The following relief is given to resident individuals:
- Child relief for each child per month (14 years old or 25 years old if still at school): KHR 75,000
- Dependent spouse: KHR 75,000
Taxation of Investment Income and Capital Gains: Non-employment income sourced from within Cambodia is not subject to salary withholding tax. However, profits tax may be payable.
Income from dividend, interest and rental are not subject to salary tax; however, they may be subject to profit tax.
Relief for Foreign Taxes: A resident taxpayer who has received foreign-sourced salary and who has paid taxes according to foreign tax laws shall receive a tax credit in Cambodia providing there is compliance with certain conditions.
General Tax Credits: There are no other general tax credits for resident employees apart from the above mentioned tax relief.
Social Security Tax: There is no social security tax in Cambodia.
Gift, Wealth, Estate, and/or Inheritance Tax: There is no gift, wealth, estate, and/or inheritance Tax in Cambodia.
Real Estate Tax: There is no real estate tax in Cambodia.
Unemployment Tax: There is no unemployment tax in Cambodia.
Cambodia Corporate Tax Rates
The standard rate of profit tax rate for companies in Cambodia is 20%.
|Oil and gas, and certain mineral exploitation activities||30%|
|General risk (non-life) insurance activities||5% (on gross premium income)|
|Resident individuals||0% to 20%|
|Tax exemption (tax holiday)||0%|
Resident taxpayers are subject to tax on worldwide income / profits while nonresidents are taxed on Cambodian sourced income / profits only. Residents earning foreign sourced profits and income can receive credits for foreign taxes paid.
Capital Gains Tax: Cambodia does not have a separate capital gains tax. Any gain on the sale of fixed assets and investment is subject to Tax on Profit.
Taxes in Cambodia
- Tax on Profit
- Minimum Tax
- Withholding Tax
- Value Added Tax
- Import Duties
- Tax on Salary
There are various other taxes that affect certain investors, including:
- Accommodation Tax
- Specific Tax on Certain Merchandise and Services
- Tax for Public Lighting
- Other taxes
A Prepayment of Tax on Profit equal to 1% of monthly turnover inclusive of all taxes except VAT, is required to be paid on a monthly basis by the 15th day of the succeeding month. The Prepayment can be offset against the annual Tax on Profit liability and the Minimum Tax.
Where a taxpayer has a Tax on Profit exemption, the taxpayer is also exempted from the Prepayment obligations. However, a nil monthly return will need to be lodged.
Where a taxpayer is not subject to Minimum Tax, a monthly Prepayment of Tax on Profit must still be made. However, unutilised Prepayments from a prior year can be used to offset the current amount due and no physical payment may be required.
The investment incentives primarily consist of:
- An exemption from Minimum Tax.
- A Tax on Profit holiday of up to 6 years.
- Import duty exemptions.
Annually, a QIP is required to obtain a Certificate of Compliance (CoC) from the CDC to guarantee its investment incentives. The CoC is intended to provide confirmation that the QIP has acted in compliance with the relevant tax regulations.
A Qualified Investment Project (QIP), being a project recognised and registered with the Council for the Development of Cambodia (CDC) will be entitled to a tax holiday. The holidays take the form of a complete exemption from Tax on Profit. The tax holiday period begins from the earlier of the year the QIP becomes profitable or 3 years from it's first revenue . The duration of these holiday periods is from 3 to 6 years.
Taxpayers can carry forward their losses for five years. The carry-back of losses is not permitted. There is no provision for any form of consolidated filing or group loss relief.
To be eligible to carry forward tax losses, a taxpayer must not change its activities or ownership.
If a taxpayer received a unilateral tax reassessment from the General Department of Taxation (GDT), a taxpayer will not be able to utilise the tax losses brought forward in the year of reassessment.
Real Regime taxpayers are subject to a separate Minimum Tax. The Minimum Tax is an annual tax with a liability equal to 1% of annual turnover inclusive of all taxes except VAT. However, an exemption has been provided for QIPs.
As a separate tax to the Tax on Profit, Minimum Tax is due irrespective of the taxpayer's profit or loss position. A taxpayer will pay either Tax on Profit or Minimum Tax, whichever is higher.
Foreign Branch Income: Generally, foreign branch income is taxable. The tax paid overseas is creditable.
Domestic Branch Income: Incorporate into the head office's tax return.
Distributions of dividends are subject to Additional Tax on Profit on Dividend Distribution (Additional Tax on Profit) as follows:
|If the dividend is already subject to CIT rate:||ATDD rate:|
|0%||20% or 30%|
Interim dividends that have not been subject to CIT are subject to ATDD at a standard rate of 20% or 30%.
Withholding Tax (WHT) needs to be withheld on certain payments (in cash or in kind) made by residents. In practice, only self-declaration regime taxpayers are required to withhold tax. The withheld tax constitutes a final tax.
The following types of payments are subject to withholding tax:
Payments to residents
- Rental: 10%
- Services: 15% (except payments to a registered taxpayer supported by proper tax invoices)
- Royalties: 15%
- Interest: 15% (except payments to a bank in Cambodia)
- Interest on fixed-term deposits: 6% (for payments from a bank in Cambodia only)
- Interest on non-fixed term savings deposits: 4% (for payments from a bank in Cambodia only)
Payments to non-residents
A resident taxpayer including permanent establishment making payment of Cambodian-sourced income to a non-resident is required to withhold 14% WHT . This withholding tax does not apply to payment of premium for reinsurance of property or other risks in Cambodia.
Withholding tax is due when the expense is paid. An expense is considered paid when it is recorded in the accounting records as an expense or when it is physically paid. Withholding tax must be remitted by the 20th day of the following month.
Cambodia Other Taxes
Public Lighting Tax (PLT)
PLT is imposed on the distribution in Cambodia of imported and locally-produced alcoholic and tobacco products. PLT is levied at 3% of the selling price of the products sold by the first importers or local producers.
For every subsequent distribution of the products by wholesalers or retailers, the PLT is levied at 3% on the 20% of the selling price recorded on invoices.
For PLT purposes, the selling price includes all taxes except PLT and VAT. PLT is a monthly tax and must be paid by the 20th day of the following month. In the event that the deadline falls on a Saturday, Sunday, or public holiday, it will be extended to the next working day.
Accommodation tax is calculated at 2% of the accommodation fee including all taxes and other services except accommodation tax and VAT.
Accommodation tax is a monthly tax and is due no later than the 20th day of the following month for self-declaration regime taxpayers. In the event that the deadline falls on a Saturday, Sunday, or public holiday, it will be extended to the next working day.
Tax on House and Land Rent
Land, houses, buildings and other constructions built on land are considered immovable property.
Tax on immovable property is levied at 0.1% per annum on immovable property valued at over KHR100,000,000 (approximately USD25,000). The tax base is the market value determined by the Property Evaluation Commission for Property Tax of the Ministry of Economy and Finance (MoEF), less the threshold. The owner, possessor or final beneficiary of the immovable property is required to pay the tax by 30 September each year. The following immovable properties are exempt from tax on immovable property:
- agricultural land
- property of the government or government institutionss
- property of an association or entity organised and operated exclusively for religious and charitable purposes, where no part of the property or related earnings are used for any private interest
- property of a foreign embassy or foreign diplomatic mission, international organisation or agent for technical co-operation of other foreign governments
- infrastructure including roads, bridges, fresh water production systems or electricity generation systems, airports, ports and railway stations
- houses, buildings, and other constructions on agricultural land directly and permanently used for agricultural activities
- immovable property that has been seriously damaged by an act of God
- houses, buildings, and other constructions that are less than 80% complete and not in use
- immovable property located in a Special Economic Zone (SEZ) that directly supports production activities. Tax on immovable property applies regardless of whether the property is in use.
Registered businesses in Cambodia must pay a (relatively nominal) Patent Tax on initial business registration and annually thereafter. Patent Tax is levied with reference to prior year turnover or estimated turnover.
Stamp tax is imposed on the following transactions based on the rate and tax base listed.
|Transfer of title or ownership of immovable property (i.e. land and buildings) including transfers for the value determined by purpose of share capital injection||4%||Transfer value or market determined by the MoEF|
|Transfer of title or ownership of all means of transportation||4%||Transfer value (market value determined by the MoEF)|
|Transfer of company shares (in part or full) or a merger||0,1%||Transfer value (market value)|
|Public procurement contracts for goods and services||0,1%||Contract value|
|Certain legal documents related to establishment, dissolution or merger of a business enterprise||-||KHR1,000,000|
The recipient or buyer is responsible for paying the stamp tax.
Tax on Unused Land
Land in towns and other specified areas, without any construction, or with construction that is not in use, and even certain land with construction, is subject to tax on unused land. The tax is calculated at 2% of the market value of the land calculated using the rate per square metre determined by the Land Appraisal and Valuation Committee at 30 June each year. The owner of the land is required to pay the tax by 30 September each year. Tax on unused land applies only to land with a value of less than KHR100,000,000 as determined by the Land Appraisal and Valuation Committee, otherwise tax on immovable property applies.
Registration Tax (or Property Transfer Tax): Certain documents relating to the establishment, dissolution or merger of a business, or the transfer of title in certain assets (such as land and vehicles) are subject to Cambodia Registration Tax. Registration tax is imposed at the rate of 4% and is generally levied on the transfer value.
Tax on Means of Transportation
This tax is imposed on different types of means of transportation including vehicles, trucks, buses, and ships. The owner of the vehicle is liable for the tax every year as prescribed by the MoEF.
Domestic producers or importers of cigarettes must buy tax stamps and affix them to the cigarette packets. No person is allowed to sell or display for sale packaged cigarettes that do not have a tax stamp affixed.
Cambodia Sales Tax / Value Added Tax Rates
The standard rate of Value Added Tax (VAT) in Cambodia is 10%.
There is also a 0% VAT rate. This rate applies to export of goods and services from Cambodia. Export of services includes the international transportation of passengers or goods, or services in connection thereto. This rate also applies to supporting industries or sub-contractors who supply certain goods and services to exporters (i.e. garment manufacturers, textile, and footwear industries) subject to certain criteria. Domestic supplies of paddy rice and exports of milled rice are also subject to 0% VAT.