Tax Updates: Cambodia Continues Tax Incentives/Exemptions For Private Sector 2024-25
In a special statement made on August 22, 2024, marking the 1-year anniversary of the Cambodian government’s new mandate, Prime Minister Hun Manet outlined an array of tax incentives and exemptions for the private sector in 2024-2025.
These incentives cover a wide range of areas, including real estate, unused land, voluntary amendment of tax returns, as well as additional new incentives for enterprises, the agriculture sector, tourism sector, and education sector.
Read Also: What Contributed To Cambodia's Lower Tax Revenue In H1 2024? (which includes details of current tax exemptions and incentives for various sectors in Cambodia)
Below are the key details of the tax incentives and exemptions highlighted in the Prime Minister's statement:
Real Estate Sector
- The Prime Minister is extending tax incentives until the end of 2025 for capital gains tax, lump-sum tax payments for real estate developers, and exemption of transfer tax on the transfer of ownership for residential houses in Borey developments valued at USD 70,000 or less.
- Additionally, tax is exempted for unused land areas below five hectares.
Voluntary Amendment of Tax Returns
The deadline for taxpayers to voluntarily amend their tax returns has been extended until the end of June 2025, without penalties or interest.
Additional New Tax Incentives for Enterprises
- Continued exemption from on-site tax audit visits for small taxpayers during business operations and closures.
- Abrogation of Prakas 360 on tax incentives for micro, small, and medium enterprises (MSMEs) in the informal economy, as there was confusion and concern from small business owners.
Prime Minister Hun Manet emphasised that “Business owners who have an annual turnover below KHR 250,000,000 (approximately USD 61,247) do not have any tax obligations" (meaning they are not required to register for patent tax or pay any taxes).
Agriculture Sector
- Continued tax exemption for agricultural land and family farmland.
- Import tax exemption for agricultural equipment and products such as fertilizers, seeds, and animal feeds.
- Extension of the suspension of Prepayment of Tax on Income (PTOI) and Withholding Tax (WHT) on service payments for enterprises that plant, produce, locally supply, or export 11 agricultural products (paddy rice, rice, corn, beans, pepper, cassava, cashew nuts, rubber, Pailin's logan, mango, and banana), as well as animal husbandry, aquaculture, and domestic palm oil products.
Tourism Sector
Previously, tourism enterprises in Siem Reap province were exempted from all types of monthly taxes, except value-added tax (VAT) and accommodation tax, as well as income tax for 2023. They were also exempt from tax audits until the end of June 2024. The Prime Minister has now announced the continuation of this exemption for another year, until June 2025.
Education Sector
All of Cambodia's tax incentives for the education sector are extended until the end of 2028.
Cambodia Taxation: What's Next?
According to DFDL Cambodia, further Prakas (regulations), instructions, or notifications will be issued by the relevant ministries to clarify the implementation of the above tax exemptions and incentives.
Regarding the further delay in capital gains tax, the Prime Minister's statement suggests that this only applies to immovable property, i.e., real estate. The remaining definitions of capital, including share transfers, will still be subject to capital gains tax from January 1, 2025.
Information for this article was sourced from a DFDL Cambodia Tax Update.