Here’s the low-down on Cambodia’s tax limbo, which can be confusing to say the least.
One of the major causes of corruption in Cambodia is reputed to be the government’s inability to legally bring in revenue, in part because almost no one in the country pays taxes. That’s not to say there aren’t laws on the books demanding that everyone pay taxes. There are. But in practice a large percentage of Cambodians and expats alike do not pay taxes on their incomes.
For tax purposes, people are considered residents of Cambodia if they have a principal place of abode in Cambodia or are present more than 182 days in the country in any 12-month period ending in the current tax year. Residents are liable for taxes on worldwide income and profits, while non-residents are only taxed on Cambodia-sourced income.
Residents are taxed on salary at rates of:
10 percent for those making between $312.50 and $2,150 per month;
15 percent for those making between $2,150 and $3,120; and
20 percent for those making $3,120 or more each month.
Non-residents get taxed a flat 20 percent.
For income from personal services, the tax rate is 15 percent.
For other, non-salary income the tax rate is usually 20 percent, but higher for certain things such a mineral exploitation.
The obligation to withhold and pay tax rests with the employer, and many employers choose not to do so. This leaves their employees in a sort of legal limbo. At the time of writing, there is no easy way to for individuals to report and pay taxes, and it must be said that most choose not to do so. It seems unlikely that this will not change in the future, but at the current time there is little enforcement against individuals who do not comply with Cambodian tax law.
On the Move to Cambodia blog we cover what Americans need to know about paying taxes in Cambodia.
PricewaterhouseCoopers has a good, free guide to taxes in Cambodia.
Cambodia’s General Department on Taxation has an English-language site with all of the regulations and FAQs.
BNG Legal also offers an easy-to-understand tax guide for individuals in Cambodia.
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.