In an announcement on October 9, 2024, the Ministry of Economy and Finance (MEF), Cambodia’s chief financial regulatory body, has further extended tax incentives for the real estate sector addressed in Notification No. 001 originally issued on January 4, 2024, as well as providing some additional property tax exemptions.
The extensions of key tax exemptions for the real estate sector in 2025 are intended to ease financial burdens on property owners, investors, and property developers within the market, and provide support the ongoing growth in the national construction and real estate industry.
1. Exemptions for Transfer Tax/Stamp Duties for the Transfer of Ownership or Possession of Borey Properties (Landed Properties within a Registered Gated Community Developments)
- Stamp duty exemption for the transfer of ownership or possession of housing valued at $70,000 or less will be extended until the end of December 31, 2025.
- For each landed housing unit in a registered Borey that exceeds $70,000 in value, a deduction of $70,000 will be allowed from the stamp duty base.
- Additional stamp duty concessions will be provided for the transfer of ownership or possession of Borey housing valued at over $70,000.
- Note that the deduction of $70,000 from the stamp duty base will only apply in relation to the purchase of housing in development projects from registered housing development companies.
2. Capital Gains Tax Exemptions
Capital Gains for Real Estate Assets:
- The implementation of capital gains tax on immovable property for physical persons is further delayed through to December 31, 2025.
Capital Gains for Other Asset Classes:
- However, implementation of the capital gains tax on gains derived from capital assets, including financial leases, investment capital, goodwill, intellectual property, and foreign currency, will be effective as from January 1, 2025 (as provided by an MEF notification in January).
READ ALSO: How Does the Capital Gains Tax in Cambodia work
3. Tax Exemptions on Immovable Property or Property Tax
Exemptions for Agricultural Land:
- Immovable property that is classified as agricultural land (meaning it is used permanently for agricultural purposes) is exempt from property tax, including any administrative penalties such as additional tax and interest, throughout 2025.
Exemptions for Residential Land being used for Agriculture:
- Immovable property with an ownership title or ownership transfer record that is registered as residential land but in fact being used for purely agricultural purposes and having been granted the express approval of, or a certified letter from, a relevant local authority, is also exempt from property tax throughout 2025.]
Exemptions for Incorrect Tax Calculations:
- In the case of immovable property registered for property tax but for which the previously declared property tax was incorrect due to an incorrect property valuation is exempt from any tax reassessment, including administrative penalties such as additional tax and interest, from the year that the tax was implemented until December 31, 2024.
- However, from January 1, 2025, the property tax due must be based on the laws and regulations currently in force.
- Meanwhile, any property that has been registered and property tax has been declared but has not been collected for several years remains exempt from any administrative penalties such as additional tax and interest until June 30, 2025. Meaning that penalties will apply as from July 1, 2025.
4. Unused Land Tax Exemptions
- The unused land tax has been suspended until the end of 2024. Owners, occupants, or final beneficiaries of such land are not obliged to declare the tax until the end of 2024.
- However, the MEF has stated that it will issue legal documents on unused land tax to ease implementation from 2025 onwards.
- Land subject to unused land tax can be deducted up to 5 hectares per plot, along with certain conditions for exemption from the tax on unused land including land being cultivated, serving economic activities, under Government ownership, land used for education or vocational activities, or land leased by legal entities or natural persons.
- It is important to note that any taxes already paid, including administrative penalties, will not be affected by these tax exemptions and suspensions.
Official Notice released by General Department of Taxation on October 9, 2024:
Please Note: There are also a series of new Tax Incentives in force for property buyers in 2025, including foreign investors in strata titled developments. Find out more about these incentives here.
If you want to learn more about the property taxes in Cambodia real estate, read our Ultimate Guide on Cambodia Property Tax, or contact us here or via Telegram for a free consultation.
KH