Cambodia – Thinking Beyond Borders | KPMG | GLOBAL



Thinking beyond borders


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Individuals are classified either as resident or non-resident taxpayers. Resident taxpayers are taxed on their worldwide salary income, whereas income tax for non-resident taxpayers is taxed only on Cambodian-sourced salary income. Employment income is subject to salary tax. Other non-employment income such as rent, interest, dividends, and consulting income is not subject to salary tax, but may be subject to profits tax.  The Cambodian tax year runs from the 1st of January to 31st December each year.  However, individuals are not required to submit annual personal income tax returns and accordingly, the monthly salary tax deduction is considered to be a final tax for individuals.

Key Message

There is no individual tax registration obligations and the tax obligation to withhold tax falls to the employer. Individuals are not required to file tax returns.


A person’s liability to Cambodian tax is determined by residence status.  An individual is considered a tax resident, if:

  • the individual is domiciled in Cambodia
  • the individual has a principal place of abode in Cambodia or
  • the individual is present in Cambodia for more than 182 days during the 12-months period ending in the current tax year.

Individuals who meet the above definition of a resident are taxed on their worldwide salary income (i.e. salaries from both Cambodian and foreign sources). A non-resident is considered as any person who does not meet the above definition of a resident and are taxed only on their Cambodia sourced salary income.  The tax to be paid is determined based on the gross monthly taxable salary of the individual.  As a general rule, it can be stated that all types of remuneration and benefits received by an employee within the framework of fulfilling employment activities constitute taxable income. These include wages and salary, bonuses, overtime, and other remuneration.


Cambodian-sourced salary is defined as salary received within the framework of fulfilling employment activities in the Kingdom of Cambodia.  In practice the tax office treat all salary received in relation to employment activities within the Kingdom of Cambodia as Cambodia-source salary, regardless of the origin or country where the remuneration is paid.


Currently, there is no mechanism for an individual assignee to register with the local tax authorities and directly pay their salary and fringe benefit tax on their own, and hence only registered employers would do the compliance for the assignee.  Technically, there is no threshold/minimum number of days that exempts the employee from the requirements to file and pay tax in Cambodia.


All types of remuneration and benefits received by an employee within the framework of fulfilling employment activities constitute taxable income. This includes salary and wages, redundancy payments, bonuses, overtime, and other compensation. Cambodia also has a fringe benefits tax regime, which levies tax on fringe benefits provided to employees, such as private use of motor vehicles, food and accommodation, utilities and domestic staff and pension fund contributions exceeding 10 percent of the employee’s monthly salary. Non-residents are taxed at a flat rate of 20 percent on their Cambodian-sourced income only. 


Foreigners are required to have a work permit.

Cambodia has no tax treaty network.

Residents are taxed at progressive rates ranging from 5 percent up to 20 percent. Residents are entitled to tax relief of 75,000 Cambodian riel (KHR) per month for each child and KHR 75,000 for a dependent spouse. Non-residents are taxed at a flat rate of 20 percent. Fringe benefits provided by employers are subject to fringe benefits tax at the rate of 20 percent. The value of fringe benefits is the fair market value of the benefit provided, inclusive of all taxes.


The National Social Security Fund (NSSF) was set up to manage the occupational risks for all workers/employees under the provisions of the Cambodian labor law. Under the scheme of occupational risk, every month, employers or owners of enterprises/establishments with eight employees or more are required to report the number of workers/employees and pay a contribution of 0.8 percent of the average monthly wage of their workers/employees to the NSSF by the 15th of the following month. Workers/employees of enterprises/establishments registered with the NSSF have the right to claim compensation when they sustain an injury at work.


Employee compliance obligations

Currently, there is no mechanism for an individual assignee to register with the local tax authorities and directly pay their salary and fringe benefit tax on their own, and hence only registered employers would do the compliance for the assignee.

Employer reporting and withholding requirements

Employers or the resident representative of foreign employers, and employees are jointly responsible for the payment of tax on salary in Cambodia, regardless of whether the salary is paid in Cambodia or abroad.

Salary tax is due to be paid by the 15th day of the month following the payment of salary.  In practice, since there is no mechanism for individuals to register with local tax authorities it is the employer’s responsibility to withhold and pay salary and fringe benefit taxes to the Department of Taxation by the due date.


Work permit/visa requirements

A visa must be applied for before an individual enters the Kingdom of Cambodia (though citizens of certain countries do not required a visa).  The type of visa required will depend on the purpose of the individual’s entry into Cambodia.  In order to legally work in Cambodia a Class E Business visa is required.  This visa is initially valid for a period of 1 month and can be renewed within Cambodia indefinitely on an annual basis following its purchase.

Foreigners working in Cambodia are also required to apply for a work permit.  No foreigner can legally work in Cambodia unless they possess a work permit and an employment card issued by the Ministry of Labour and Vocational Training.

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.

Permanent establishment implications

There is the potential that a permanent establishment (PE) could be created as a result of extended business travel, but this would be dependent on the type of services performed and the level of authority the employee has.

Indirect taxes

Value-added tax (VAT) is applicable at 10 percent on taxable supplies made in Cambodia. 

Zero rated supplies include exports of goods and services, and certain charges in relation to international transportation of people and goods. In addition, certain items are exempt from VAT (subject to approval from the Ministry of Economy and Finance).

Local data privacy requirements

Cambodia currently has no data privacy laws.

Exchange control

The Foreign Exchange Law of 1997 provides that there should be no restrictions on foreign exchange operations. However, these operations can only be performed through an authorized financial institution. Although the KHR is the official currency of Cambodia, the US dollar (USD) is in common circulation and the majority of commerce is denominated in USD. There are no restrictions on the establishment of foreign currency bank accounts in Cambodia for residents.

Non-deductible costs for assignees

Employees are not allowed any deductions against their salary income, as employees are not required to submit annual tax returns. There are currently no established guidelines with regard to costs that are nondeductible for employers or assignees.

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