Accounting in Cambodia

on Apr, 17 2024

Here’s a range of information about accounting services in Cambodia, including tax compliance and services such as consulting and financial analysis.

If you still can’t find your answer here, just ask us at B2B Cambodia and we’ll put you in touch with one of our trusted partners.

Accountancy Firms and Practice in Cambodia

Cambodia has progressively adopted and integrated international accounting standards into its business practices, reflecting a commitment to enhancing transparency and financial accountability. Since the adoption of the International Financial Reporting Standards (IFRS) and their adaptation as Cambodian International Financial Reporting Standards (CIFRS) for SMEs in 2009, the landscape of financial reporting in the country has evolved significantly.

The shift to CIFRS was a pivotal development in Cambodia's regulatory framework, aiming to standardize accounting practices across businesses of all sizes. However, despite the availability of these standards, many small and medium enterprises (SMEs) still face challenges in fully implementing them. The complexity of IFRS can be daunting for SMEs, particularly given the limited number of qualified accountants in the country—under 200 to serve over half a million SMEs.

The challenge in Cambodia is less about the quality of the accounting laws and more about their enforcement. Many businesses are either unaware of the requirements to maintain proper records or choose to ignore them. The GDT's focus has shifted towards stricter enforcement to ensure compliance, which includes maintaining basic financial documentation as outlined in the Law on Taxation.

There are a range of Accountancy and Tax Firms in Cambodia who can handle a variety of accounting services for business.

Tax services are a significant component of the services provided by accountancy firms. These include compliance, risk management, structuring and transfer pricing. The firms also provide audit or assurance and advisory services for their clients.

Read more information below on Accountancy Firms and practice in Cambodia.

What accountancy firms are there in Cambodia?

There are several international accountancy firms operating in Cambodia including KPMG, PriceWaterhouseCoopers, BDO and Grant Thornton.
Smaller firms such as CamATC provide tax compliance and bookkeeping services for their clients.
These firms usually belong to international accountancy networks, though membership of these global networks does not provide indemnity in cases of negligence.

How has the Cambodian tax system changed since the ASEAN integration?

Cambodia’s tax system underwent a huge overhaul. The Law on Financial Management 2016, promulgated on December 17, 2015, abolished Cambodia’s former two-tier tax system, dropping the more informal Estimated Regime. As such, the country is left with a unified, one-regime system that should widen the taxpayer base.
Additionally, the remaining tax regime (known as the Real Regime) has been restructured, with taxpayers now divided into three categories according to income: small, medium and large taxpayers.
There is still a long way to go to complete this transition, with only around 40,000 SMEs—out of an estimated 600,000 operating in the country—having registered with the DGT.
The GDT has been working hard to clamp down on tax evaders, make the tax collection system more transparent and improve the services it offers. The move aims to bring the country in line with expected standards for ASEAN members.
Prakas No. 1139 on Tax Registration was issued by the Ministry of Economy and Finance on October 2014. It stipulated the documents that had to be submitted to, and conditions required to be met, by entities registering with the General Department of Taxation (GDT).
The Prakas caused much controversy because it put a significant administrative burden on businesses and was abrogated in 2016 by Prakas No. 496.
Among other provisions, under Prakas No. 496, the chairman of the board of directors of the enterprise is not obliged to pay a visit to the GDT in order to receive the Patent Tax Certificate and/or the VAT Registration Certificate and/or the Tax Registration Card—as was the case under Prakas No .1139. Instead, he or she can issue a Power of Attorney to authorize any member of the board of directors to be photographed and have his fingerprints taken on his/her behalf.
The 2017 Law on Financial Management introduced changes in the Tax on Salary, including the expansion of the 0% tax band, which now has been extended to $250.
Likewise, the same law changed the rebate for dependent children and housewife from 75,000 Khmer Riel (around $19) to 150,000 ($38). The move aims to reduce poverty for employees, factory workers, teachers and government officers.
Under a new Prakas published in May 2017, some primary financial services—including deposit, loan and credit activity and initial public offerings (IPO)—were officially exempted from VAT. However, due to concerns within the banking community, the Prakas has been put on hold temporarily. At the time of writing, negotiations are underway.
Following a recent revision of the 2017 Financial Law, all companies maintaining proper accounting records are exempt from paying the 1% Minimum Tax (MT exemption). Previously, only Qualified Investment Projects (QIP) were eligible for the exemption. To implement this MT exemption, the Ministry of Economy and Finance issued Prakas No. 638 MEF.Prk on the Criteria of Improper Accounting Records and Procedures for Paying Minimum Tax on 4 July 2017.
Cambodia has recently signed Double Tax Agreements (DTA) with Singapore, China and Brunei. These types of bilateral treaties seek to set guidelines for the payment of taxes in situations where a resident person of Country A has business activities in Country B.
A new DTA with Thailand is expected very soon.
To speed up the process of registering with the tax department, the GDT launched in 2014 a portal that allows companies to carry out part of the process online.

How does the tax overhaul carried out by the Cambodian government affect my business?

The Law on Financial Management 2016, promulgated on December 17, 2015, abolished Cambodia’s former two-tier tax system, dropping the more informal Estimated Regime. As such, the country is left with a unified, one-regime system that should widen the taxpayer base.
Additionally, the remaining tax regime (known as the Real Regime) has been restructured, with taxpayers now divided into three categories according to income: small, medium and large taxpayers.
There is still a long way to go to complete this transition, with only around 40,000 SMEs—out of an estimated 600,000 operating in the country—having registered with the DGT.
Experts believe the difficulty lies in educating the people about their obligations under the new tax regime.
Following the tax overhaul, the GDT introduced simplified accounting procedures for small taxpayers. They will no longer be expected to follow the International Financial Reporting Standards (IFRS), which will significantly simplify recording and documentation tasks for small business owners.

Will I be tax audited in Cambodia?

By law, if a Cambodian based company fulfils two or more of the following three criteria, they must have their financial statements audited by a registered external auditor.
This must be completed within six months after the end of the financial year.
The first prerequisite is if revenue of that business is more than $750,000 annually; Secondly, if the value of total assets of the business is more than $500,000; And, thirdly, if the company employs more than 100 members of staff.

What are the different classifications of tax audits in Cambodia?

There are three types of audit in Cambodia: a desk audit; a limited audit; and a comprehensive audit.
Desk audits merely re-examine information already submitted to the General Department of Taxation (GDT) and involve no visit from tax auditors.
Limited audits are more in-depth than desk audits, with the option of tax auditors going to the company’s premises to examine additional documents.
Comprehensive audits are more thorough than the other two and may uncover potential tax exposures through examination of any area of the business.
Desk audits and limited audits are carried out by the local Khan (district) branch of the GDT. If the business is classified as a “Large Taxpayer” both desk audits and limited audits are carried out by the Department of Large Taxpayers (DLT). Large taxpayers include Qualified Investment Projects, branches of foreign enterprises or multi-national companies, and any other enterprise with annual turnover in excess of KHR1,000M (around $250,000). All comprehensive audits are carried out by the Department of Enterprise Audit (DEA).
If taxes have been underpaid, a notice of tax reassessment is issued outlining the outstanding sum, plus a penalty of up to 40 percent on the owed sum and interest of two percent per month.
Businesses have 30 days to appeal and provide evidence for the tax authority to evaluate.

Are accounting software systems available in Cambodia?

Accounting software packages are becoming increasingly popular as companies get to grips with the digital world.
The first stage is recording transactions on Accounting Software Systems. Several packages are used, traditionally on desktop PCs the current market leader is QuickBooks. Other options are Sage 50 (formerly Peachtree) and local software Conical Hat. Large companies typically use more complex software.
Many companies unnecessarily duplicate work, they record transactions in Excel first and then perform data entry again in their accounting system. Not only are they duplicating work but also they are not leveraging the accounting systems’ functionality.
There is new cloud accounting software such as an incredible local company Bhanji that produces FREE ONLINE accounting software as well as the global players such as Quickbooks Online or Xero.
Once transactions are recorded, management accounting analysis should follow. Using charts & tools to visually display data is paramount in facilitating management to make important business decisions for large and small businesses alike, such as new product launches, pricing and cost cutting.

Who regulates accounting in Cambodia?

All companies must register with the Cambodian Ministry of Commerce in order to conduct business. The appropriate license or licenses then need to be obtained from the relevant individual ministry.
In Cambodia, all companies are required to comply with Cambodia International Financial Reporting Standards (CIFRS) that is fully adopted from International Financial Reporting Standard (IFRS). The National Accounting Council, is working in developing and improving the accounting standard in Cambodia by complying with IFRS, but the implementation of this is being done slowly and will be completed gradually due course.
As the integration of ASEAN in future, complying with the IFRS would be necessary, as almost all of the countries in the world have decided or are planning to implement IFRS so that international companies can do business easily globally.
Foreign investment companies should consider registering with the Council for Development of Cambodia to apply for taxation and economic concessions.
The National Bank of Cambodia regulates the banking and finance sector, while the Securities and Exchange Commission of Cambodia (SECC) regulates financial service providers operating in the country.

Are there professional accounting associations in Cambodia?

Practicing accountants must register with Kampuchea Institute of Certified Public Accountants and Auditors (KICPAA), and lawyers with the Bar Association of the Kingdom of Cambodia. Members of KICPAA can use the design-nation Certified Public Accountant (CPA). Currently, only listed companies with SECC are required to comply with the standard, while it is up to the shareholder of the company to decide the requirements for the accounting standard to be used.
Cambodia’s National Accounting Council regulates the accounting and auditing standards as well as the financial reporting requirements of local businesses.
The association for accountants is the Association of Certified Chartered Accountants (ACCA).
There is no local accounting qualification but accounting is taught by the Association of Certified Chartered Accountants (ACCA).

Top Accounting Tips

B2B call on our panel of experts to share what they have learnt about tax and accounting in Cambodia.

Make sure you stay above board

Keep your books in order and make sure your business stays within the remit of the law.
This includes ensuring all elements of the business are registered correctly and with the right ministries, and proper contracts and legal documents are in place.
Get the help of an accredited accountant to ensure taxes are being properly paid to avoid hefty fines from the Tax Authority in the future.

Be prepared for audits

Remain ready for a visit from the taxman.
The GDT is undergoing tax audits on many foreign businesses as part of its drive to overhaul the system.
There are three types of audit in Cambodia: a desk audit; a limited audit; and a comprehensive audit.
To avoid hefty fines, it is advised that books, invoices and receipts are kept in order at all times.

Get the experts

Accounting and Tax can be complicated on home turf let alone when you’re in a foreign land.
This is why it’s advisable that you leave it all to the experts.
As Cambodia develops expediently laws and regulations are constantly changing it therefore becomes essential that you have someone to keep you in the know.