Out of 183 economies, the World Bank has ranked Cambodia 171st in terms of ease of setting up a new business. Cambodia saddles would-be entrepreneurs with a plethora of procedures to follow, and the average number of days it takes to register a business clocks in at 85–much more than in neighboring countries. Registering a business in Cambodia is complicated and expensive, and if you’re from one of the growing number of countries that prohibit their citizens from paying bribes abroad–and in fact will prosecute them for doing so–you’re looking at some tough choices.
A fair amount of palm-greasing, or “tea money,” is required to start a business. Each step of the process requires fees, many of which are not strictly legal. For example, once your company is fully registered, in order to stay compliant with Cambodian law you must pay your taxes. In order to pay your taxes, you need to pay an unofficial $20 “facilitation fee” at the tax office each month. If you don’t, your taxes won’t get registered as being paid.
There are no easy answers, but be assured that slowly but surely things are getting better. Despite all of this, the Cambodian government is very pro-business, and allows 100-percent foreign-owned companies, unlike some of their neighbors.
Many businesses fly under the radar of the authorities, and others choose to take over from existing businesses that have already completed the required paperwork. If you do decide to start your own business, it’s worth it to hire a local fixer to guide you through the process. This will usually cost around $500 for a small business and will save you a lot of time and headaches.
Also, the World Bank’s Doing Business in Cambodia site has a lot of valuable information.
BNG Legal has an easy-to-understand guide, Maintaining Corporate Compliance in Cambodia, that’s a good read for those wanting to do things properly.
This is an excerpt from Move to Cambodia: A guide to living and working in the Kingdom of Wonder. To learn more about 100+ topics that pertain to Cambodia expats, please consider buying the book.