TAX ON WAGES AND SALARIES
NATURE OF TAX
A monthly tax on income from wages and salaries and on fringe benefits, withheld at source. The tax applies to all wages received in Cambodia, and to wages received abroad by Cambodian nationals if the employer is a Cambodian resident. The highest marginal tax rate is low (20 percent), minimizing disincentives to work. Tax paid abroad can be credited against tax due in Cambodia ensuring that there will be no double. taxation. The exemption threshold is extremely high. It stands at 750,000 riels per month, equivalent to about US$ 3,500 per annum. Even with this high exemption threshold, progressivity is low and the highest marginal rate is only 20 percent. This rate begins to apply only when income is higher than the equivalent of US$ 90,000 per year. For an annual income equivalent to US$ 100,000, the average tax rate is still below 9 percent. By any standards, this is extremely low.
EXEMPTIONS AND DEDUCTIONS
No exemptions
Deductions from the tax base are applied
according to the number of !children under 18
years of age, as follows:
| For 0 or 1 child | 0 |
| For 2 or 3 children | 10 |
| For 4 or 5 children | 20 |
| For 6 or more children | 30 |
A progressive rate applies to the monthly tax base as follows:
| Less than | 750,000 riels | 0 |
| 750,000 to | 1,000,000 riels | 5 |
| 1,000,000 to | 10,000,000 riels | 10 |
| 10,000,000 to | 20,000,000 riels | 15 |
| More than | 20,000,000 riels | 20 |
NATURE OF TAX
A tax on receipts from rents on land and buildings, levied since 1991 on rents paid by foreigners, and extended to rents paid by Cambodians nationals in 1994. The tax is paid by the owner of the property. Under the present system, nobody is exempt from it by law with the exception of only those taxpayers who get less than 500,000 riels (US $200) per month from all rental sources. All incomes from the rental of property are covered by the tax, regardless of the nationality of the tenant and of the purpose of the rental.
EXEMPTIONS AND DEDUCTIONS
Property owners whose monthly income from rents is below 500,000 riels are exempt. Enterprises, taxed on an actual account basis (see table below), are also exempt. There are no other exemptions.
RATES
10 percent
ENTERPRISE PROFITS TAX
NATURE OF TAX
A monthly tax on the profits of businesses, including interest received and capital gains.
Incorporated businesses, manufacturing and commercial enterprises whose annual turnover is more than 200,000,000 riels (US$ 77,000), service enterprises whose annual turnover is more than 100,000,000 riels (US$ 38,500), importers and exporters, enterprises that have signed a contract with the State, enterprises covered by the Investment Law, hotels and restaurants are now required to keep accounts and pay accounts-based profit tax.
For all other enterprises, profits are determined presumptively by applying estimated profit margins to turnover, as shown in the table below:
Manufacturing and commercial enterprises whose annual turnover is more than 100,000,000 riels (US$ 38,500) and service enterprises whose annual turnover is more than 50,000,000 riels (US$ 19,250), have to keep simplified accounts, including turnover, to which the above margins are applied. For other enterprises, turnover is assessed by the Taxation Department. The presumptive profit tax is collected monthly. Enterprises subject to the accounts-based profit tax pay monthly instalments equal to 0.5 percent of monthly turnover, the outstanding balance being payable in March of the following year.
No refund is given in the case of a loss, but the tax already paid can be carried forward for 3 years.
EXEMPTIONS AND DEDUCTIONS
There are no exemptions in the tax law. However, under the Investment Law, passed by the National Assembly in August 1994, exemptions can be granted to investing enterprises by the Council for the Development of Cambodia (CDC) for up to 8 years, commencing from the year that the investment project first becomes profitable.
The Central Bank is not subject to tax.
A forthcoming decree is expected to enact rules on depreciation, inventory valuation, and other provisions, and specify the tax treatment of some items, such as dividends received.
Interest paid and capital losses are deductible.
RATES
Corporations will be taxed from now on at a flat rate of 20 percent instead of the progressive tax rate schedule, whose rates range from 10 to 30 percent, and which will continue to apply to the profits of individual and household businesses. The progressive rate is as follows:
| Up to 1,000,000 riels | 10% |
| 1,000,000 to 10,000,000 riels | 15% |
| 10,000,000 to 20,000,000 riels | 20% |
| Above 20,000,000 riels | 30% |
TAX ON PROPERTY
PROPERTY TRANSFER TAX
NATURE OF TAX
Levied on the transfer of land, buildings, motor vehicles, and motorcycles. Tax is paid by the purchaser on presumptive values, fixed as follows, since 1991:
| Individual cars | 375,000 riels |
| Trucks, vans, etc. | 300,000 riels |
| Motorcycles | 100,000 riels |
| zone 1 | 30,000 riels/sq meter |
| zone 2 | 15,000 riels/sq meter |
| zone 3 | 5,000 riels/sq meter |
| zone 1 | 125,000 riels/sq meter |
| zone 2 | 75,000 riels/sq meter |
| zone 3 | 50,000 riels/sq meter |
Transfers of property ordered by the State are exempt. Government, public utilities and charitable organizations are also exempt. The sale of motor vehicles is exempt if the seller is subject to turnover tax or to enterprise profit tax.
RATES
The following rates apply:
| Land and buildings: | 6 percent |
| Cars, trucks, and vans: | 4 percent |
| Motorcycles: | 2 percent |