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The tax system in Phnom Penh, Cambodia, primarily derives from the Law on Taxation, supplemented by several Prakas (ministerial orders or regulations), circulars, and tax bulletins. It comprises various types of taxes including profit tax, withholding tax, value-added tax, specific tax on certain merchandise and services, salary tax, patent tax, real estate tax and more. The General Department of Taxation (GDT), under the Ministry of Economy and Finance, is responsible for administering and collecting taxes.
Tax laws in Phnom Penh are notably complex and frequently updated which can lead to confusion. Lawyers are instrumental in numerous circumstances for instance, when setting up a new business, handling disputes with tax authorities, managing audits and investigations, ensuring compliance with new regulations, or optimizing tax efficiency. Furthermore, failure to comply with tax laws can result in severe financial penalties, making a legal professional's counsel worthwhile.
The most relevant aspects of local tax law in Phnom Penh include Cambodian tax residency and taxation on the worldwide income of residents. Companies are subject to a 20% tax on profit. Certain entities, like oil and gas companies or insurance companies, have different rates. Value Added Tax (VAT) is usually 10% and applies to most goods and services. The Salary Tax, a type of income tax, ranges from 0 to 20 percent, based on different income brackets. Property owners are also subject to property tax at a rate of 0.1% over immovable property worth more than KHR 100 million.
The standard VAT rate in Phnom Penh, as in the rest of Cambodia, is 10%.
Income tax, or salary tax, is calculated based on taxable income which is divided into six progressive tax bands, each subjected to its corresponding rates ranging from 0% to 20%.
Businesses are subject to a 20% corporation tax on profit. Businesses also need to account for VAT, withholding tax and other applicable taxes.
Yes, tax residents in Phnom Penh, as well as the rest of Cambodia, are taxed on their worldwide income.
Property in Phnom Penh is subject to a property tax at a rate of 0.1% over immovable property worth more than KHR 100 million.
For further information, you may find the General Department of Taxation’s website helpful. This is the governing body for taxation in Cambodia. Other important resources include the Law on Taxation and various Prakas (ministerial orders or regulations) issued by the Ministry of Economy and Finance.
If you need legal assistance regarding tax in Phnom Penh, it is advisable to seek help from law firms specializing in Cambodian tax laws. An experienced lawyer can provide advice tailored to your specific situation, answer your questions, and guide you through the complexity of local tax laws. Ensure that you gather all necessary documents and fully understand your obligations to ensure a smooth process.
