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Cambodia
Why cambodia?
Situated in South-eastern Asia, between Thailand and Vietnam, Cambodia is an attractive investment destination for businesses looking forward to expand in ASEAN Countries.
Real GDP growth is forecast to be 5 percent in 2022, after the strong export performance earlier in the year, and nearly 5½ percent in 2023, supported by the continued recovery of tourism and ongoing policy support, although dampened by external pressures and the impact of rising prices on real disposal income. Cambodia Foreign Direct Investment (FDI) increased by 1.0 USD billion in Sep 2022, compared with an increase of 844.5 USD million in the previous quarter.
Advantages
Cambodia has signed Agreements for the Avoidance of Double Taxation (“DTAs”) with Singapore, China, Brunei, Thailand, Vietnam, Indonesia, and Hong Kong. Cambodian investment laws are very open and offer a range of incentives to investors. This combined with its close proximity to production facilities in Thailand and Vietnam along with the Chinese market makes Cambodia a lucrative market to invest in. The country offers a number of special advantages to foreign investors as follows:
Special economic zones (SEZs)
- Cambodia offers a perfect setting for foreign investments especially in border areas and for the export-based manufacturing sector,
- One-stop service to investors from registration of investment projects to the obtaining of routine export-import approvals,
- Exemptions from customs duty and taxes on imports and exports for most industries.
Investment Incentives
- Investment incentives are available for Qualified Investment Project (QIPs);
- Investment Laws make licensing procedures simpler, more transparent, predictable, automatic, and non-discretionary.
Multilateral agreements
Cambodia has signed various multilateral agreements with countries, which:
- create international standards as well as the efficiency advantages of a broader market; and
- offers low tariffs on a number of product categories in trading countries.
Special Depreciation
- QIPs, that do not avail of the income tax exemption are entitled to a special depreciation allowance of 40% of the value of new or used tangible properties used in production or processing,
- Special depreciation allowance is deductible during the first year of purchase of the tangible property or the first year using such property.
Customs Duty Exemption
- In accordance with the provisions of Article 26 of the Law on Customs, the exemption from customs import duties and taxes are granted for certain goods and to certain qualified importers.
- QIPs enjoy customs duty exemptions for imports of production equipment, construction materials, and production inputs.
Simple Tax Regime
Initially, Cambodia followed three types of tax regimes i.e. real, simplified, and estimated. In 2016, it adopted a single regime of taxation i.e. real regime or self-assessed tax regime. However, there are three categories of taxpayers in the real regime:
- Small Taxpayers: It includes Sole Proprietorship or Partne