Cambodia business tax rates in 2026
Foreign investors preparing to operate in Cambodia should budget for more than the 20% standard corporate income tax. VAT, monthly income tax prepayments, withholding tax, employee salary tax and annual patent tax can all apply to the same enterprise. The correct calculation depends on its legal form, commercial activities, suppliers, employees and investment approvals. The PwC Cambodia corporate tax summary explains the principal income tax rules, while the General Department of Taxation (GDT) administers tax registration, declarations and payments.
| Tax or obligation | General 2026 position |
|---|---|
| Corporate income tax | 20% for medium and large taxpayers; special rates can apply |
| VAT | 10% standard rate; eligible exports may be zero-rated |
| Income tax prepayment | 1% of monthly turnover, excluding VAT |
| Minimum tax | 1% of turnover where applicable; exemptions for proper accounting records |
| Resident services withholding | 15% in specified circumstances |
| Non-resident withholding | Generally 14% on specified Cambodian-source payments |
| Salary tax | 0% to 20% progressive for resident employees |
| Patent tax | KHR 400,000 to 5,000,000, depending on classification and turnover |
These figures are general rules, not a quotation of the total tax bill. A manufacturer registered as a Qualified Investment Project (QIP), for example, may have incentives unavailable to an ordinary consultancy. An investor should obtain written confirmation of the actual taxpayer classification and any applicable exemption before forecasting cash flow.
How corporate income tax is calculated
Medium and large taxpayers generally pay 20% corporate income tax on taxable profit. Small taxpayers can face progressive rates from 0% to 20%, while oil, gas and certain mineral exploitation activities attract 30%. The treatment of insurers also differs. A company established as a Cambodian tax resident is generally taxable on worldwide income; a non-resident enterprise is generally taxed on Cambodian-source income and income attributable to its Cambodian permanent establishment. See PwC on corporate income tax and taxpayer classifications.
Consider a service company with US$500,000 in revenue and US$400,000 in expenses that qualify as tax deductions. Its taxable profit is US$100,000 and a 20% tax produces a US$20,000 annual income tax liability before permitted credits and adjustments. Actual taxable profit can differ from accounting profit: not every payment is deductible, and capital expenditure, depreciation, related-party charges and supporting documents need to be reviewed.
An ordinary loss-making company may owe no corporate income tax based on profit, but that does not eliminate its VAT, payroll, withholding or filing obligations. Minimum tax may also matter if the company does not satisfy the relevant exemption conditions.
Monthly 1% prepayments and minimum tax
Cambodia generally requires a monthly prepayment of income tax equal to 1% of turnover including relevant taxes other than VAT. A business with US$80,000 of monthly turnover would calculate US$800 for that month. The payments are normally credited against the annual income tax or minimum tax liability. This matters especially for high-turnover, low-margin businesses: prepayment is tied to sales, not monthly profit. The tax administration guidance sets out the mechanism.
The minimum tax is a separate annual calculation, generally 1% of annual turnover excluding VAT. Enterprises maintaining proper accounting records can be exempt, but this must not be confused with an automatic exemption from monthly prepayments. QIP incentives can also change both obligations. For investment modelling, calculate ordinary corporate income tax, monthly prepayments and minimum tax separately, then apply relevant credits and exemptions without double-counting.
VAT: when 10% applies and when it does not
VAT is normally charged at 10% on taxable domestic goods and services. Eligible exports may be zero-rated, while certain supplies are exempt. These treatments are materially different: zero-rating can preserve eligible input VAT recovery, whereas exemption generally restricts it. The PwC summary of Cambodian VAT and other taxes identifies examples including insurance, certain financial services, medical services and land as exempt supplies.
For example, a VAT-registered firm invoices US$1,000 for a taxable service and charges US$100 VAT. If the firm also paid US$40 of eligible input VAT on related purchases, its illustrative net VAT payment is US$60. Valid tax invoices and the actual input-credit rules determine whether that US$40 is recoverable. Do not budget input VAT as fully reclaimable for exempt activities or where supporting invoices are inadequate.
Cross-border digital services and imports require additional attention. Non-resident suppliers providing specified e-commerce services may have simplified registration obligations, and Cambodian business buyers can have reverse-charge responsibilities. Companies buying overseas software, advertising, subscriptions or consulting should test both VAT and withholding implications before paying the invoice.
Withholding tax on suppliers, rent and overseas payments
Withholding tax requires the payer to retain and remit tax from certain payments. The ordinary resident rates are 15% for covered service fees, royalties and specified interest, and 10% for rent. The services withholding does not generally apply when payment is made to a registered taxpayer supported by a valid VAT invoice. Payments to non-residents can attract 14% withholding on specified Cambodian-source income, subject to statutory exceptions and treaty relief. Rates and exceptions are set out in PwC’s withholding tax guide.
| Payment type | General withholding position |
|---|---|
| Services to a Cambodian resident | 15% where covered; VAT-invoice exception may apply |
| Rent to a Cambodian resident | 10% |
| Royalties to a Cambodian resident | 15% |
| Certain interest paid to residents | 15%, subject to exceptions |
| Specified Cambodian-source payments to a non-resident | Generally 14%, subject to relief |
Suppose a Cambodian company contracts an overseas supplier for US$10,000 in services that are legally subject to 14% non-resident withholding. The company may have to remit US$1,400 to the tax authority. Whether the supplier receives US$8,600 or the Cambodian buyer bears an extra amount depends on the contract and any gross-up provision. Before signing, review where the service is performed, the source of the payment, treaty eligibility and the contract’s tax clause. A foreign invoice alone does not establish an exemption.
Employment taxes and other staff costs
Employers generally withhold tax on salary from remuneration paid to employees. For Cambodian tax residents, monthly salary tax uses progressive bands: 0% up to KHR 1.5 million; 5% up to KHR 2 million; 10% up to KHR 8.5 million; 15% up to KHR 12.5 million; and 20% above that. Non-resident employees generally face a flat 20% salary tax on Cambodian-source salary. Taxable fringe benefits can be charged separately at 20%. Source: PwC’s Cambodia individual income tax summary.
Employment cost is not limited to salary tax. Employers should account for National Social Security Fund registration and contributions, including occupational risk, healthcare and pension obligations where applicable. Wage bases, ceilings and current scheme rules must be confirmed against the workforce. An expatriate employee’s immigration or work permit status does not by itself settle their salary tax residence.
Patent tax, taxpayer classification and yearly filings
Patent tax is an annual business tax separate from income tax. The 2026 amounts are KHR 400,000 for small taxpayers, KHR 1.2 million for medium taxpayers, and KHR 3 million or KHR 5 million for large taxpayers depending on turnover. The normal 2026 patent tax deadline was 31 March 2026. Businesses with multiple activities need to check whether multiple patent tax obligations arise. See DFDL’s 2026 annual compliance briefing.
The small, medium and large classifications depend on more than a company’s perceived size. Cambodian corporate legal form, sectoral turnover and specific registration conditions affect the result. A locally incorporated private limited company should not assume it qualifies as a small taxpayer merely because it has low sales. Classification changes the compliance timetable, documentation burden and, in some cases, the applicable income tax rules.
The standard corporate income tax year is the calendar year unless another year-end is authorised. Annual income tax returns are generally due within three months after the year-end; monthly tax returns and payments are generally due by the 20th of the following month, with the official e-filing calendar able to provide later online dates. Always follow the specific GDT filing calendar rather than assuming every monthly deadline is identical. Financial statements, bookkeeping and independent audit requirements may also apply.
Investment incentives: can a foreign-owned company pay less tax?
Some investments registered with the Council for the Development of Cambodia can obtain QIP status and tax benefits. Under the incentive framework, the income tax exemption under Option 1 is nine years for Group 1, six years for Group 2 and three years for Group 3, determined by the approved investment activity. After the exemption, eligible projects generally pay 25%, 50% and 75% of the otherwise payable income tax across successive two-year stages. The Cambodian Investment Board incentive schedule explains these categories and relief.
An alternative QIP package permits special depreciation and specified enhanced expense deductions. Depending on the project and approval, qualifying imports and inputs may benefit from exemptions. The central test is not foreign ownership: a business must meet investment activity criteria, obtain the relevant registration and comply with its incentive conditions. Ordinary businesses without QIP approval should forecast taxes under standard rules. In particular, the investment tax holiday should not be assumed to remove VAT, employee taxes and every other payment obligation.
Capital gains tax and buying an existing Cambodian business
Capital gains tax implementation changed in 2026. The GDT delayed capital gains tax on immovable property until 1 January 2027, while implementation for leases, investment assets, goodwill, intellectual property and foreign currencies commenced on 1 January 2026. The general capital gains rate is 20% of taxable gains where the regime applies. Details are explained in PwC’s January 2026 update and KPMG’s January 2026 analysis.
It is important to distinguish the tax on gains realised by individuals or particular asset holders from the corporate income tax rules applying to a self-assessment taxpayer’s asset disposals. The character of the asset and seller can change the applicable tax. A property sale in 2026 is not automatically tax-free because the immovable-property capital gains implementation date was deferred; transfer stamp duty and other transaction taxes can still apply.
Buying shares in an existing enterprise can leave the investor exposed to liabilities already sitting within the company. Tax due diligence should inspect prior annual and monthly returns, VAT invoicing, salary tax, withholding tax, patent tax, notices from the GDT, liabilities from related-party transactions and outstanding assessments. Buyers should separately compare an asset purchase with a share purchase instead of treating their tax outcomes as interchangeable.
Tax treaties and distributing profits overseas
Cambodia’s double taxation agreements can change the domestic withholding outcome for eligible cross-border income. The availability of a treaty depends on the partner jurisdiction, whether the treaty is in force, the beneficial owner, residency evidence and treaty-specific procedures. A treaty does not automatically exempt every payment. Overseas owners considering dividends, shareholder loans, royalties or management charges should review both Cambodian withholding obligations and the receiving country’s tax treatment.
A useful investment model follows profit through to the shareholder. Begin with taxable company profit and income tax; then examine withholding on distributions, foreign tax credits or treaty relief, foreign exchange costs and any other applicable obligations. This gives a more realistic estimate of money that can actually be repatriated than the 20% corporate headline rate alone.
A practical tax checklist before investing in Cambodia
- Confirm the activity, legal form, tax residence and GDT taxpayer classification.
- Prepare a 12-month turnover and taxable-profit forecast, including 1% monthly prepayments.
- Identify which sales are subject to VAT, exempt or zero-rated, and whether input VAT is recoverable.
- List payments to landlords, consultants, licensors, lenders and non-residents to identify withholding tax.
- Budget salary tax, benefits tax, NSSF and annual patent tax.
- Check QIP eligibility directly against the CDC investment activities, not marketing claims.
- For acquisitions, commission transaction-specific tax due diligence and assess historic liabilities.
- Confirm current filing calendars, evidence requirements and the tax treatment of future exits.
Frequently asked questions
Do foreigners pay a higher corporate income tax rate?
Foreign ownership by itself does not establish a higher standard corporate income tax rate. The relevant taxpayer type, residence, activities and approved incentives determine treatment.
Does a company making a loss still pay tax?
It can still owe monthly prepayments, VAT, withholding, payroll-related taxes or minimum tax where applicable. A loss does not automatically remove registration and filing duties.
Are all businesses eligible for a three-to-nine-year tax holiday?
No. These are incentives for eligible, registered QIPs. An ordinary foreign-owned business does not receive them merely by incorporating in Cambodia.
What is the first tax question when buying a Cambodian company?
Ask for the full tax compliance history and verify it independently. The agreed purchase price does not reveal unpaid historical liabilities or the taxation of the share transfer.
This guide reflects sources available in October 2026 and is general information, not transaction-specific tax advice. For statutory updates and formal guidance, consult the General Department of Taxation and the Cambodian Investment Board.