Tax Incentives for
Investment in Cambodia
IMF Tax Policy Seminar for Asian and
Pacific Countries on Tax Incentives
Tokyo, June 9, 2009
Financed by JSA
by Vann Puthipol
Director Department of Large Taxpayers
General Department of Taxation
Contents
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Major Taxes in Cambodia
Tax Incentives:
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Law on Investment 1993
Finance Act 2001
Prakas No 303.MEF.TD 2001
Amended Law on Investment 2004 & Prakas No 302
MEF.TD 2005
Prakas No 298 MEF.TD 2005
Prakas No 305 MEF.TD 2008
Tax Incentives in exchange with Labors’ Wages
and Conclusion
The Taxes
Major Taxes : ( Finance Act for 1994-95 and LOT )
- Tax on Profit ( 30%, 20%, 9%,0%);
- Minimum Tax (1% of annual turnover);
- Tax on Salary (0%, 5%, !0%, 15%, 20%);
- Value Added Tax (10%); Turnover Tax (2%)
- Specific Tax on Certain Merchandise and Services
(multiple rates);
- Tax for Public Lighting (3%);
- Tax on Accommodation (2%);
- And other type of taxes such as Patent Tax, Stamp
and Registration Tax, Unused Land Tax etc…
1993- Law on Investment
Investment Enterprises
 Recognized by Council for Development of
Cambodia (CDC) after applying for investment
status.
 Customs Duty free for importing machineries,
equipments, and raw materials
 9% Profit Tax rate, or
 Profit Tax exemption for a period up to 8 years
2001- Finance Acts of 2001
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Released Investment Enterprises from
Minimum Tax while others are subject to
The relief covers around 40 Billion Riels
per year.
2001- Prakas No 303 MEF.TD
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The VAT exemption on import and supply of:
 Fertilizer for use in the agriculture;
 Plant seeds;
 Parts of cut branches of tree for growing;
 Animal medicines, foods and food grinding machines;
 Animal breeding stock including wild animal;
 Small tractors and their spare parts for family use;
 Equipment for growing seeds and hatching eggs;
 Pump of the pumping machine.
The above exemption covers around 30 Billion Riels for both
import and domestic supply.
2004 - Amended Law on Investment
2005 - Prakas No 302 MEF.TD
Qualified Investment Project (QIP)
 New Tax Exemption Period :
 Trigger period
 Three years period
 Priority period
 9% Profit Tax rate for a transitional period of 5
years after the promulgation of the ALI
 Decentralized to local authority for QIP of less
than 2 million USD capital
 2 years tax holiday extension for old investment
enterprises
2005- Prakas No 298 MEF.TD
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Zero Rate VAT for local supply of goods and
services to Garment Export Oriented Companies
Solving the cash flow problems
Encourage local production industry
The above solution covers around 150 Billion
Riels cash flow for government’s current
expenditure.
2008- Prakas No 305 MEF.TD
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Suspension of Monthly Prepayment of Profit Tax
for Export Oriented Companies
Solving monthly cash flow problems for workers’
salary
Encourage local production industry
The above solution covers around 70 Billion
Riels cash flow for government’s current
expenditure.
Tax Incentives in exchange with Labors’
Wages and Conclusion
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Total number of labor : 300,000
Salary : 300,000 x 50 x 12 x 4,000 = 720 Billion
Total Tax on Profit Exemption = 210 Billion/Y
Tax incentives is a vital measure for Cambodian
economy.
If no tax incentives, perhaps no business, no
employment, and no tax as well
THANK YOU