Country report Cambodia 2022

Economic overview

At the time of the Paris Peace Treaty, the Cambodian economy was in ruins. Decades of riots, civil wars, deforestations, etc., had destroyed the main economic activities, namely agriculture, fishing and forestry, and inflation was skyrocketing. As support from the Soviet Union waned, Cambodia began to replace the centralized, Soviet-style economic system through some economic reforms that embraced market opening, foreign investment, incentives and private ownership. This has resulted in a decline in inflation levels, a new start of rice exports and a significant development of the tertiary sector.

With the exception of the main urban centers, however, in rural areas the economy continues to be based on activities related to the primary sector. Cambodia thus remains one of the poorest countries in the world. The high presence of mines in the area then limits the agricultural use of land and the country also faces major deficiencies from an infrastructural point of view.

Main sectors of industry

The Cambodian economy is mainly based on agriculture, in particular on the production of rice (a crop that occupies about 80% of arable land). The production of corn, cassava, beans, soy, sesame, sugar cane, bananas, tobacco and coconuts are also moderate. 60% of the active population finds employment in this sector, which contributes to the formation of the GDP for 30%. Before the war and the civil unrest of the seventies and eighties, the country was largely self-sufficient in terms of food and significant quantities of rice were exported, of which, since 1974, it has become necessary to import.

The most important product in the sector is rubber which, followed by timber, represents one of the most important items in the country’s economy. Fishing, especially for carp, perch and smelt, is also of considerable economic importance for Cambodia, which finds in Lake Tônlé Sap one of the largest freshwater fish reserves in Southeast Asia; however, most of the annual catch is used for internal needs.

The industrial sector (which employs about 13% of the workforce) is still developing, having suffered considerable damage from the conflicts of the 1970s and has only been partially reactivated. Still in the 1990s, mostly concrete and rubber were produced.

Cambodia also has large hydroelectric power potentials, but war and ongoing internal conflicts have prevented the development of this sector as well. In fact, most of the electricity produced in the country comes from fuel-fired power plants. In 2005, deposits of oil and natural gas were discovered in Cambodian territory and when their trade starts (2009-2010), it is expected that this will have a strong impact on the country’s economy.

The tourism sector is also expanding, thanks above all to the archaeological attractions of Angkor Wat and the architectural beauty of the period structures in Phnom Penh.

Taxation for businesses in Cambodia

The Cambodian tax system is based on the world wide income principle, whereby the income of residents is taxed in Cambodia wherever it is produced, while for non-residents the income is subject to taxation in the country only if it derives from a Cambodian source.

An individual is considered to be a resident of Cambodia if he or she meets one of the following conditions:

  • has their main residence or residence or if they are present in Cambodia for a period longer than 182 days in a 12-month period ending in the current fiscal year. 
  • A legal person is considered resident if the head office or management or control is in Cambodia.

Payroll tax

Cambodia’s tax system does not provide for personal income tax. However, the people

Resident and non-resident individuals are subject to monthly payroll tax on income resulting from work. As already highlighted, resident subjects are subject payroll tax for income produced everywhere, while non-resident income only on income made in Cambodia.

The tax applies to employment income in any form: wages, salaries, overtime, bonuses, bonuses.

Fringe Benefits Tax

The tax on ancillary allowances is applied to taxable fringe benefits paid by the employer work, including the provision of vehicles, housing, alimony, domestic staff, subsidized loans, discounted sales, educational assistance, insurance premiums and pension contributions in excess of

levels provided for by labor law. The tax on ancillary allowances is charged to the beneficiary.

The Fringe Benefits are taxable at a rate of 20% of the total value of the service provided. To the for tax purposes, the value of the benefit is the market value, inclusive of taxes.

Property tax

This is a tax applied to real estate properties for a value exceeding 100 million riels in reference to land, houses, buildings and other constructions built on the land, with a tax rate of 0.1% on the property. The tax base is the value of land, houses, buildings and other constructions that are built on the land with the deduction of 100 million riel.

Profit tax

The profit tax is collected at a standard rate of 20%. However, some exceptions: the rate is 30% on income from oil or natural gas production e

from the exploitation of natural resources For individuals who carry out a business activity or professional rates are progressive and range from 0% to 20%.

Tax legislation governs further taxation of profits, which takes place at the time of distribution of dividends, paid by the distributing company.

Investing in Cambodia

Cambodia has a liberal regime and is inclined to encourage investments from abroad.

In order to promote these investments, a series of specific measures have been prepared, among which, we can mention:

  • the possibility of setting up companies wholly owned by foreign parties
  • the recognition of tax exemptions for a total period of eight years
  • the provision of an income tax of 20%, to be applied at the end of the tax exemption period
  • the abolition of customs duties for the import of capital goods e
  • the failure to provide for any restrictions on the repatriation of capital.


Regarding the establishment of companies under Cambodian law, although the current investment regulations do not contain discriminatory measures on the nationality of the relative shareholders, there are, however, restrictions on the conduct of specific business activities, including, for example , those that deal with the production of cigarettes, the grinding of rice, the extraction and processing of precious jewels, film productions, printing and publishing, crafts and silk weaving. In fact, in order to carry out these activities, the presence of a local partner is required, alongside the foreign one, or the prior obtaining of specific authorization from the competent government authorities.


In the case of real estate investments or foreign investments in public companies, the regulations establish in this regard that majority participation, equal to at least 51%, must be reserved for citizens of Cambodian nationality and / or the Government itself.

Foreign direct investments must be registered in advance with the Cambodian Ministry of Commerce and individual investors must obtain the relative licenses from the competent ministries. Those wishing to benefit from any incentives are required to submit their request to the appropriate office (Cambodian Investment Board), headed by the Development Council of Cambodia, which will decide after having carefully assessed the correspondence of the documentation produced with the established criteria. From law.

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