A Guide to Salary Tax in Cambodia 

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Are you looking for a lucrative offer on your real estate investment? Well, there’s no better place than Cambodia. With a rising number of foreign investors taking an interest in this “underrated” country, property prices are still very low. So, this might be your time to grab the opportunity and move ahead with your investment to get great returns. 

But is it that simple? Whether you’re a national or foreign investment, you must know the salary regulations. Since the country’s laws are strict, familiarity with the salary regulations will make investment significantly easier. 

For this, you’d need the help of our property professionals to know the real estate market and salary taxes. Our experts have combined all the details about Salary Tax in Cambodia in the blog below to help you with in-depth insights.

Understanding Salary Tax in Cambodia

If you’re eligible, you must pay salary tax in Cambodia within the timeline. Well, if you’re new and still navigating your way through, here’s all you need to know. 

  • Salary Tax and its Purpose 

In Cambodia, salary tax is often referred to as personal income tax. Therefore, we can decode that salary tax is the tax an individual will have to pay on the income he earns. One of the main purposes of salary tax is to generate revenue for the government. The revenue generated is further used for promoting public infrastructure and various services. With the help of salary tax, the government offers a fair distribution of tax burden. This further caters to different social welfare programs. 

  • How is Salary Tax Calculated in Cambodia? 

Although salary tax calculation in Cambodia follows the general method, as a taxpayer, you must know that it significantly depends on your earnings. Your employer holds the right to make mandatory deductions from your income. The net amount you receive is the taxable income, which is further eligible for a progressive tax rate. However, you must know that tax brackets determine how much would be calculated. 

  • Tax Rates And Tax Brackets For Salary Income

The salary income is quite an efficient aspect of understanding how much tax you will be charged. Well, for your convenience, you can find all the relevant information about tax rates and brackets in the table below:

Taxable Income Range (KHR)Tax Rate
Up to 1,300,0000%
1,300,001 – 2,000,0005%
2,000,001 – 8,500,00010%
8,500,001 – 12,500,00015%
12,500,000 and above20%
  • Deductions Or Exemptions Available For Real Estate Investors

As a real estate investor, you might get the upper hand regarding deductions. It is important to note that the deductions you’d be subjected to will significantly depend on the type of investment you’re making. Some of the common exemptions and deductions you will be eligible for are as follows:

  • Deductions for property-related investments like mortgage fees, maintenance costs and property management charges. 
  • Tax holidays
  • Capital gains

Compliance and Reporting

Being familiar with the compliance requirement for salary tax should be your #1 priority once you become a real estate investor in Cambodia. For this purpose, you must know the tax rates and the bracket each one of them falls into. If you have employees working under you, your primary responsibility is to provide them with relevant certificates. Having a certificate as proof makes it easier for them to file the personal tax income rate. 

It is a legal necessity in Cambodia to know your tax regulations. If you’re following the information appropriately, it will allow you to get rid of any legal complexities. However, even your minor mistake in following regulations will land you in legal trouble in Cambodia.

A key way through which you can easily avoid penalties is by tracking and making your payments on time. Your failure to manage even the basics will put a lot of financial stress on you. Well, it not only paves the way for personal problems but also for professionals. How would you get out of it if you ever find yourself stuck in such a situation? You’d need the help of professional real estate agents and tax consultants.  

Tax Planning and Optimization Strategies

Tax planning can seem like a lot if you’re new to Cambodia and its real estate industry. However, your local real estate agent and tax consultant can do wonders in helping you pull through. No matter where you begin, as long as you have professional support, things will be smooth and seamless. And guess what? You could also free yourself from tax liabilities, which is a huge Win. 

However, some basic strategies you can follow for better tax planning are as follows:

  • Make sure to manage all your deductions in a place to lower the taxable income. 
  • You must strategically plan when to invest to get the advantage of capital gains tax. 
  • You must have an appropriate entity structure before you move ahead with your investment. 

Conclusion

Things might seem a bit complicated as a beginner real estate investor in Cambodian property. Well, there’s no rocket science involved in it, but as starters, you need professional advice. 

Our local real estate experts have been in the industry for long and are aware of all tax implications. If you want more information, contact us to connect you with professional tax advisors who will guide you completely from Point A to Point B.

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