Personal income tax in Cambodia.


This is the ultimate guide to personal income tax in Cambodia.

Individuals working in Cambodia will be subjected to tax on their income, and it is important that you understand your tax obligations as a taxpayer.

Let’s find out more about personal income tax.

What is personal income tax in Cambodia?

Personal income tax is a direct tax imposed on the income of an individual. Companies must deduct income tax from salaries, wages or other remuneration that is made to employees.

Who is considered as a tax resident in Cambodia?

Tax residents in Cambodia are individuals who are domiciled in, have a principal place of abode or have been in Cambodia for more than 182 days during the tax year.

Non-residents are individuals who have stayed in Cambodia for less than 182 days in a tax year, which runs from 1 January to 31 December.

Worldwide salary vs Cambodia salary

Individuals who are deemed tax residents are taxed on their worldwide salary income, which includes salary from both foreign and Cambodian sources.

Non-residents are only taxed on Cambodian sourced salary income.

Types of taxable income

Taxable income in Cambodia is categorised into two groups: 1. salary; and 2. fringe benefits.

Salary

Salary is all types of remuneration and benefits received by an employee.

This includes:

  • Salary and wages
  • Redundancy payments
  • Bonuses
  • Overtime
  • Compensation

Fringe benefits

Fringe benefits are subject to tax on fringe benefits.

The benefits include:

  • Private use of motor vehicles
  • Meals and accommodation
  • Travel expenses
  • Low-interest loans
  • Life and health insurance premiums
  • Pension fund contributions that are more than 10% of the monthly salary
  • Entertainment or recreation expenses

What are the personal income tax rates in Cambodia?

On 13 February 2020, the Cambodian government issued a sub-decree to implement the new taxable income threshold for the monthly salary of residents and non-corporate business owners.

Residents are taxed at the following rates:

Monthly salary (KHR)Tax ratesCumulative deduction (KHR)
0 – 1.3 million0%0
1,300,001 – 2 million5%65,000
2,000,001 – 8.5 million10%165,000
8,500,001 – 12.5 million15%590,000
Over 12.5 million20%1,215,000

Non-residents are taxed at a rate of 20%.

Income earned from non-corporate business owners, including partnerships and sole proprietorships is subject to individual tax rates from 0% to 20%.

Annual taxable income (KHR)Rates
0 – 16 million0%
16,000,001 – 24 million5%
24,000,001 – 102 million10%
102,000,001 – 150 million15%
Over 150 million20%

Fringe benefits are taxed at a rate of 20%.

Tax exemptions in Cambodia

The following allowances are exempted from taxation:

  • Commute expenses (between work and home)
  • Accommodation allowances
  • Meal allowances
  • Social security or welfare fund
  • Health insurance or life/health insurance premium, as long as the premiums are paid for all employees
  • Baby care allowances or nursery expenses
  • Supply of uniforms or special equipment used during the employment
  • Limited indemnity for a layoff
  • Redundancy payments

Tax relief in Cambodia

Residents are entitled to a tax relief of 150,000 KHR per months for each child less than 14 years old or up to 25 years if he/she is a full-time student at a recognised educational institution, and 150,000 KHR for a dependent spouse who must not be working.

Tax returns in Cambodia

The company that pays salaries to its employees must prepare a tax on salary return which must be filed and paid to the General Department of Taxation by the 20th of the following month.

Residents are not required to submit an annual personal income return to the General Department of Taxation.

If the filing date falls on a Saturday, Sunday or public holiday, the deadline will be extended to the next working day as announced by the General Department of Taxation.

Late tax filing penalties

Failure to file, late filing or filing of a fraudulent return will result in a penalty of 10%, 25% or 40% and an interest penalty of 1.5% per month on the late and underpaid taxes. Penalties are imposed on the employers, not the employees.

Foreign tax reliefs

Resident taxpayers can claim tax credits on foreign-sourced salary if documentation confirming the payment of foreign tax is available. The credit allowed is the amount of foreign tax paid or the amount of salary tax on salary from all sources, whichever is lower.

Conclusion

Income in Cambodia is categorized into salary and fringe benefits. It is taxed at rates depending on an individual’s monthly salary, while non-residents are taxed at a flat rate of 20%.

To stay compliant with the personal income tax regulations in Cambodia and for assistance with the monthly tax on salary return, do not hesitate to contact us.