Each country has their own set of distinct rules and regulations regarding tax and the payment of employees. The tax system in Cambodia is set up to attract a variety of industries to participate in the Cambodian marketplace. If you are thinking of starting a business in Cambodia or you already have an established enterprise that you want to introduce to the Cambodian market, it may be beneficial to outsource your payroll & taxation.
What does the Payroll and Tax consist of?
Administering a payroll in Cambodia consists of more than calculating monthly wages; tax, social security and other deductions must also be accounted for. Furthermore, pay slips are required to be distributed to employees before the employee receives their due wages, the pay slips must be written in Khmer and it can include English.
Payroll and Tax registration in Cambodia
Companies are required to register (online registration) and get an approval letter from the Ministry of Commerce. Companies who have registered will receive their approval letter and certificate of incorporation. Once registered, companies must then register with the General Department of Taxation within 15 days and get a tax patent and VAT certificate.
Requirements for tax registration:
- Memorandum and Articles of Association
- Approval letter from the Ministry of Commerce
- Certificate of Incorporation
The Labor Inspector is required to number and initial the payroll ledgers. Payroll ledgers are required to include information of each employee, employed by the enterprise (name, date of birth and address), as well as information on nature of the work, wages and vacation days.
Once the Labor inspector has numbered and initialed the payroll ledgers, the enterprise must complete a Social Security Registration. A list of employees that will be registered with the National Social Security Fund must be submitted, accompanied by the relevant details of each employee.
In Cambodia there is a corporate income tax of 20%. However, mining, oil and gas companies are taxed at 30% and insurance gross premiums are taxed at 5%, while there is no Capital gains tax.
A sales tax or value added tax (VAT) rate of 10% is applicable in Cambodia. However, a 0% VAT rate applies to support particular industries who supply certain goods and services.
In Cambodia, non-residents are taxed a rate of 20% on all income sourced in Cambodia. The following income tax rates apply to residents:
|Taxable income||Applicable tax %|
|KHR 0 – 500,000||0%|
|KHR 500,001 – 1,250,000||5%|
|KHR 1,250,001 – 8,500,000||10%|
|KHR 8,500,001 – 12,500,000||15%|
|KHR 12,500,001 or more||20%|
- Income from rental of property: 10%
- Payment for services rendered: 15%
- Interest payments: 15% for resident or resident foreigner
- Interest payments: 14% for non-resident
- Payment of royalties: 15%
In Cambodia, when administering a payroll, it is important to calculate all leave days and time off work. Employees who are employed on a full time basis and who work 48 hours a week, are entitled to 1.5 days of annual leave for each month of service.
Employees in Cambodia are entitled to up to 6 months of sick leave if a medical certificate has been provided by a qualified and licensed doctor. An employee is entitled to 100% of their salary for the first month, 60% for months 2 and 3, and unpaid leave thereafter.
INS Global can assist you with your payroll
Administering a payroll is a basic necessity in every business. You need to ensure your employees are paid on time, with the necessary taxes paid and deductions accounted for. Administering a payroll is time consuming and it can be costly. Partnering with INS Global, allows you to focus more on developing your business, while we take care of your payroll and tax needs. The experts at INS Global are well equipped, across all disciplines of HR, to help your company reach new levels.