Cambodia Incorporation: Steps to Open Business

Accounting Services in Cambodia

Many international clients engage Tetra Consultants for accounting services in Cambodia. In addition to accounting services, Tetra Consultants will also take care of your taxation obligations. By outsourcing accounting and tax obligations to Tetra Consultants, you can reduce overhead costs while being ensured of timely reporting and filings. Our accounting team will provide you with an explanation on all the required deadlines and expectations before the start of the engagement.

Tetra Consultants will timely complete your firm’s financial statements, corporate tax returns and manage auditors on your behalf and without the need to travel. It is important to meet the deadlines stipulated by the Cambodia Tax Department. Failure to comply will result in late penalties and fines.

Contact us now to find out more about Tetra Consultants’ accounting services in Cambodia. Our team of experts will revert within the next 24 hours.

Annual reporting requirements

• According to the Cambodia General Department of Taxation, it is mandatory for business owners partaking in businesses in Cambodia to file annual tax returns and settle outstanding tax payments electronically within 3 months of the end of the accounting period.
• Corporations who failed to meet the stipulated deadline of 3 months will be subjected to a late filing penalty on the tax due. Taxpayers who were unable to resolve outstanding tax payments in due time will be subjected to penalties as well depending on the degree of non-compliance.
• Taxpayers in Cambodia are subjected to penalties up to 40% additional tax payments and a monthly interest of 1.5% on late and underpaid taxes.

Cambodia Corporate Income Tax

• Resident companies in Cambodia are subjected to a relatively low Corporate Income Tax Rate of 20%. However, corporations in the oil and natural gas business industry are taxable at a 30% Corporate Income Tax Rate.
• Furthermore, as part of the Cambodian government’s incentive to attract foreign direct investments, business entities under the Cambodia Special Economic Zones are exempted from Cambodia’s Corporate Income Tax for a period up to 9 years. Thereafter, beyond the duration of the granted tax holiday, business entities are subjected to a 20% Corporate Income Tax Rate.

Audit requirements in Cambodia

• According to Cambodia’s General Department of Taxation, corporations must submit annual financial statements audited by an independent auditor registered with the Kampuchea Institute of Certified Public Accountants and Auditors should the respective listed categories apply:
  • Annual turnover above Riels 3,000,000,000 (approximately USD 750,000)
  • Total assets above Riels 2,000,000,000 (approximately USD 500,000)
  • More than 100 employees
• Regarding Qualified Investment Projects under the Law on Investment, it is mandatory for corporations undertaking these projects to submit annual financial statements audited by an independent auditor registered with the Kampuchea Institute of Certified Public Accountants and Auditors.

Value Added Tax (VAT)

• Cambodia’s Value Added Tax has a standard rate of 10%. It is applicable to the supply of goods and services in Cambodia and imported goods by a taxable person.
• Value Added Tax is not applicable to exports of goods and services. Furthermore, VAT on imported production inputs and equipment for Qualified Investment Projects in Cambodia are exempted and will be borne by the Royal Government of Cambodia.
• The supply and import of several specific products enjoy a waiver from the Cambodian Value Added Tax. The Value Added Tax will be covered by the Cambodian government. VAT exempted imports and business sectors are listed accordingly:
  • Business sectors and industries providing a supply of production materials and equipment to the manufacturing of garments, clothing, shoes, bags and hats for export.
  • Suppliers and contractors providing supplies and production materials to agricultural products.
  • Suppliers of basic food and rice production.

Withholding Tax

• According to Cambodia Tax regulations, Cambodia registered business entities are obligated to withhold a percentage of certain payments made to non-residents. The withholding tax compliance falls under the responsibility of the Cambodia business entity.
• Generally, dividends paid by a Cambodian corporation to a non-resident shareholder are subjected to a 14% withholding tax rate. The withholding tax does not apply to dividends paid to resident shareholders.
• Royalties paid by a Cambodian corporation to a non-resident are subjected to a 14% withholding tax rate. Furthermore, a 15% withholding tax rate is applicable when royalties are paid to resident taxpayers.
• Interest paid by a resident Cambodian company to a non-resident is subjected to a 14% withholding tax rate. Additionally, a 15% withholding tax rate is applicable to interests paid to resident taxpayers.

Other tax considerations in Cambodia

• Cambodia’s General Department of Taxation has signed 5 Double Tax Agreements (DTA) with other countries, minimizing tax obligations of businesses.

Contact us now to find out more about Tetra Consultants’ accounting services in Cambodia as well as how to complete the process of Cambodia company registration. Our team of experts will revert within the next 24 hours.