Navigating Rental Property Taxes in Cambodia

Investing in property is a proven way to generate consistent monthly income, creating financial stability while presenting opportunities for long-term growth. Additionally, understanding rental property taxes ensures that your investments remain compliant and profitable. However, like owning property comes with property tax obligations, renting out property in Cambodia also entails specific tax responsibilities. Whether you’re dealing with residential, commercial, or industrial properties, understanding rental property taxes is crucial. Below, we’ve outlined the two main types of taxes that apply to rental properties in Cambodia:

1. Value Added Tax (VAT)

Value Added Tax (VAT) applies to the supply of goods and services. Businesses and companies renting out properties must register for VAT and obtain a tax identification number (TIN) for tax filing purposes. The standard VAT rate in Cambodia is 10%.

2. Withholding Tax (WHT)

Withholding Tax (WHT) is a tax on income derived from specific payments and transactions, including rental income. This applies to both residents and foreigners.

Read: Ultimate Guide to Cambodia Property Tax

Who Needs to Pay Rental Property Tax?

If you own property in Cambodia and rent it out, rental property taxes must be paid. Both local and foreign property owners are required to comply with tax regulations. For individuals:

• Residents: The annual rental income tax rate is 10%.
• Foreigners: The annual rental income tax rate is 14%.

Additionally, the type of tax you’ll need to pay depends on whether you’re renting as an individual or as part of an organization. Below is a detailed breakdown:

1. Individual Owner to Individual Renter: No Tax

If you’re renting out your property as an individual to another individual, no tax is applicable. Individual owners are also not required to issue tax invoices for their rental properties.

2. Individual Owner to Company Renter: WHT Applies

If an individual rents out property to a company (or an individual affiliated with a company), Withholding Tax (WHT) applies. Generally, the property owner is responsible for paying this tax. However, in most cases, the company renting the property deducts and remits the WHT directly to the government. The specific tax arrangements can be negotiated between the owner and the company renter.

3. Company Owner to Individual Renter: VAT Applies

For company-owned properties rented to individuals, Value Added Tax (VAT) must be paid. A VAT invoice needs to be issued by the property-owning company, and the tax is typically included in the monthly rental payments. Be sure to calculate and outline the VAT clearly in the lease agreement.

4. Company Owner to Company Renter: VAT Applies

If a company rents its property to another company, VAT is required. The property-owning company must issue a VAT invoice, and the tax is usually embedded in the monthly rent. This arrangement can also be negotiated with the tenant.

Simplify Your Rental Property Management with IPS

Navigating the complexities of rental property management requires expertise, particularly when it comes to taxes. At IPS, we provide comprehensive property management services designed to streamline this process for you. Our team expertly handles tax payments, rental collections, utility bills, and other fees, ensuring that your property investments are managed with precision and efficiency.

To learn more about how our services can benefit you, contact us today.

Experience the IPS Advantage in Cambodia

At IPS Cambodia, we guide property owners and investors through every step of the process, from compliance with tax regulations to maximizing rental income. If you’re exploring property investment options or need help managing your rental properties, reach out to our team.