Business Startup

Cambodia officially joined the Asean Economic Community (AEC) in December 2015. While it is still early to assess the impact the new membership has had on the country, we believe in the following years your startup could benefit from:

• Access to a market of over 600 million people (or almost 10% of the world population) in the ASEAN region.
• Lower transaction costs on trading, the import of materials by the elimination (or lowering) of tariffs and non-tariff barriers, as well as on the export of our final products.
• Advancements in processes for customs, logistics, and transport connectivity for trading.
• Access to skilled labour from other countries, as well as educational & comprehensive capacity building programs to train our existing staff.
• Access to ASEAN capital investment opportunities.
• Exchange of knowledge and improvement of processes to implement Good Manufacturing Practices, HACCP, Intellectual Property Rights, etc. For example, Cambodia has recently signed all three intellectual property treaties managed by WIPO: the Madrid Protocol, the Patent Cooperation Treaty, and the Hague Agreement Concerning the International Registration of Industrial Designs.
• With AEC membership we will see proper regulations and all the proper taxation put in place, making importing and exporting and other business-related activities much clearer and easier to understand. It will actually lower the price of a lot of goods here. For example, Cambodia recently abolished the estimated tax regime, forcing all enterprises to join the real regime.
• The country has recently signed Double Tax Agreements (DTA) with Singapore, China and Brunei, while a new DTA with Thailand is expected very soon.

• Cambodia also saw a 4 percent increase in new registered companies for the first three months of 2015.
• In 2014, almost 4,000 businesses registered with the Ministry of Commerce, marking a 29% increase on 2013.
• In addition, trademarks registered with the Ministry of Commerce rose from 4,199 in 2015 to 4,685 last year. The rise in registered trademarks follows Cambodia’s accession to the Madrid Protocol in 2015.
• The total number of active trademarks in the country exceeds 47,000.
• There were 513,759 non-street businesses in Cambodia as of 2014, however, only 10,565 of these are registered.
• Foreign firms are mostly operated by Chinese, South Koreans, Japanese and Vietnamese who are carrying out business in the garment, footwear, agriculture, agro-industry, tourism, construction and real estate sectors.
• 5,128 of the registered businesses operating in Cambodia are foreign owned. 2,028 of these are Vietnamese owned while 382 are US or European owned.
• These increases may also reflect the tightening of business registration requirements by the Cambodian Government and compliance with these laws across the Cambodian market.
• However, Cambodia is considered number 180 out of 190 countries on the Ease of Starting a Business, according to the World Bank Group, so challenges could be significant.
• Frequent challenges include a lack of access to information on regulations and licenses & permits needed for a specific industry and a lack of skilled labour.

• It boasts a relatively simple tax system offering several incentives, especially in select industries and those operating from a Special Economic Zone.
• Companies can be 100% foreign-owned.
• Offers duty-free avenues into the US and EU.
• Large, cheap workforce.
• Dollarised currency.
• Easy for businesses to move money in and out of the country.
• A hub for foreign businesses located in the heart of the ASEAN Economic Community (AEC).

• A valid visa, work permit and a bank account with a minimum balance of USD$1,000 (4 million riel) – you may withdraw this as soon as the business is officially established.
• A certificate of good health.
• More often than not, a police report from your home country identifying you as a person(s) of good standing with no history of criminal activity.

• To register a company in Cambodia the name must also be registered with the MoC.
• To receive the company’s constitutive documents—which include the certificate of incorporation, the Articles of Association, and the business license—you will need to register with the Ministry of Commerce (MoC). The process can now be carried online here.
• Within 15 calendar days of having registered with the MOC, the new enterprise must register with the GDT. At the GDT, you will obtain the tax patent and the VAT certificate of the new company.
• Finally, all enterprises must pay a visit to the Ministry of Labour and Vocational Training (MLVT), which registers the company under the Labour Law, provides workbooks for Khmer employees and work permits and employment cards for foreign workers. If the new company has more than eight employees, they must also be registered under the National Social Security Fund.
• The World Bank latest estimation is that it takes 99 days for the whole process to be completed.

For more information, read our latest article on the subject.

• Newly established businesses also need to obtain the necessary licences in order to operate.
• Licences are issued by the relevant ministry. For example, a publishing company would need a licence from the Cambodian Ministry of Information; while a business aimed at tourists would need to apply to the Cambodian Ministry of Tourism.
• Licences are renewed annually.
• The Cambodian Ministry of Labour must also be contacted and given a Declaration of the Opening of Business before operations start or within the first 30 days of operation if the business has less than eight employees.

• Within 15 calendar days of registering with the MoC, businesses must register with the General Department of Taxation (DGT) to receive a taxpayer’s identification number (TIN).
• Registering as a taxpayer will cost you $500 and $650, for a half-year and a full-year respectively.
• At the GDT, you will obtain the tax patent and the VAT certificate of the new company. If all is in order, it will take the GDT between two and four weeks to issue the tax patent and VAT certificate.
• Various taxes are also payable each month, usually on the 20th. They are the tax on salary; the prepayment of profit tax (equal to 1% of turnover); and VAT (equal to the total VAT charged to your customers minus VAT payable to your suppliers).

For more information on the subject, click here.

• By law, if a Cambodian based company fulfils two or more of the following three criteria, they must have their financial statements audited by a registered external auditor. This must be completed within six months after the end of the financial year.
• The first prerequisite is if revenue of that business is more than $750,000 annually; Secondly, if the value of total assets of the business is more than $500,000; And, thirdly, if the company employs more than 100 members of staff.

• There are three types of audit in Cambodia: a desk audit; a limited audit; and a comprehensive audit.
• Desk audits merely re-examine information already submitted to the General Department of Taxation (GDT) and involve no visit from tax auditors.
• Limited audits are more in-depth than desk audits, with the option of tax auditors going to the company’s premises to examine additional documents.
• Comprehensive audits are more thorough than the other two and may uncover potential tax exposures through examination of any area of the business.
• Desk audits and limited audits are carried out by the local Khan (district) branch of the GDT.
• If the business is classified as a “Large Taxpayer” both desk audits and limited audits are carried out by the Department of Large Taxpayers (DLT).
• Large taxpayers include Qualified Investment Projects, branches of foreign enterprises or multi-national companies, and any other enterprise with annual turnover in excess of KHR1,000M (around $250,000).
• All comprehensive audits are carried out by the Department of Enterprise Audit (DEA).
• If taxes have been underpaid, a notice of tax reassessment is issued outlining the outstanding sum, plus a penalty of up to 40 percent on the owed sum and interest of two percent per month.
• Businesses have 30 days to appeal and provide evidence for the tax authority to evaluate.

• It is not recommended you shut up your business and just leave Cambodia.
• The CDC states companies must declare themselves bankrupt or formally dissolve; otherwise you may face legal action and hefty fines.
• To close your business, first send a letter to the Cambodian Department of Taxation declaring your intent to close.
• Within two months, an auditor will address outstanding taxes.
• A certificate of closure is then issued, which must be taken to the MoC, who then issue a Certificate of Closure.
• As with registering a business, the process for dissolving a company can now also be done online. For more information, click here.

• Research conducted in 2017 by the World Bank in conjunction with the International Finance Corporation revealed it takes an average of 99 days to go through the nine procedures required to incorporate and register a new firm in Cambodia, and costs on average $615.
• Many business owners have said the process can be quicker – from just one week to a month, especially for small and mid-sized companies where there is less paperwork involved.
• The process can go very smoothly if you’re well prepared.
• Doing everything through yourself might save you costs, but having professional advice, an attorney to review your documents, and a Khmer speaker can simplify the process greatly.

• Looking at assets is a good starting point, such as machinery, fixtures, inventory, etc.
• But also consider intangible assets such as customer relationships and the employees.
• A potential buyer should also estimate a company’s earning potential.
• Is the market saturated, or is there still a niche to be filled and can the business grow and develop?
• How strong is the competition?
• What does it offer that sets it apart from competitors?
• If the business has an earnings track record, it’s easier to project the likely future revenue stream.

• Like all markets, the Cambodian market has some pitfalls unfamiliar to many new investors.
• Make sure you understand these issues fully, or hire a professional business advisory firm to help you navigate through them.
• Using local assistance can help bridge the language barrier when dealing with officials and local businesses, ensuring transactions run smoothly and the best prices and quality of goods are secured for you.

• Take time to build strong relationships with all your business partners (suppliers, distributors, partners, officials etc) based on trust and mutual understanding before undertaking any substantive business start-up in Cambodia.
• Recognise those who seek long-term business prospects and those seeking only to use you for a “quick buck”.
• Find entrepreneurs with appropriate industry experience.
• But ensure they share your future vision.

• It’s a good idea to spend some time living in Cambodia before making any major investment decisions.
• Carry out feasibility and market entry studies ahead of setting up in Cambodia.
• Despite the fact the Cambodia joined the ranks of lower-middle income countries in 2016, you need to keep in mind that the country remains an emerging market and may behave differently to more established markets.
• Make the effort to understand not only the market, but also the culture and people.

• Foreign investors should not just be looking to make a “quick buck” in Cambodia.
• Your businesses commitment to the country will, in turn, help sustain your business.
• Bring employment opportunities for locals.
• Demonstrate the benefits you are able to bring and the Cambodian Government will welcome your investment as a Qualified Investment Project (QIP).

• The regular E-type visa has been split into several sub-types, including the EB visa, the most common type. It can be purchased upon entry to Cambodia for $35 but is valid for only one month.
• Once you’re in the country, this can be renewed indefinitely on a 3, 6 or 12 monthly basis (most local travel agencies can arrange this). Keep in mind that visas shorter than half a year are single entry.
• Currently, a one-month EB extension costs $50, three months is $80, six months is $160, and one year is $290 when purchased through an agent.
• In August 2017, police officials at the Department of Immigration confirmed that it will become compulsory for all foreigners to obtain an official work permit/employment card to be eligible to apply for a long-term extension to their EB visa (e.g. six months and one year)

• The regular E-type visa has been split into several sub-types, including the EB visa, the most common type. In August 2017, police officials at the Department of Immigration confirmed that it would become compulsory for all foreigners to obtain an official work permit/employment card to be eligible to apply for a long-term extension to their EB visa.
• Work permits are issued by the Cambodian Ministry of Labour and are valid for one year.
• An online system (fwcms.mlvt.gov.kh) was established on September 2016 to aid in the registering for work permits.
• Work permit/employment cards, which are two separate documents but can be applied for at the same time and considered as one application, costs $100 per year. The fee for the visa application process is $33. Applicants must have also undertaken a straightforward health check at the Ministry, which costs $25. You can pay $60 to an agent to get your health certificate without going to the Ministry.
• The official period for renewal of a work permit/employment card is between January and March each year, although the Ministry of Labour has yet to confirm the exact details surrounding late payments.
• Companies must submit their Foreign Worker Quota Requests to the Ministry of Labour between September and November each year.
• The online system has received substantial criticism, especially from foreigners frustrated with having their applications refused. Many of these are either self-employed or freelancing, although it is technically possible to successfully obtain a work permit/employment card for these types of workers.
• Individuals can get help with the application process from agents such as ‘Call Kim’ ([email protected] or 092 256 388), who charges a fee per application that varies on a case-by-case basis.
• This information is not set in stone and can vary from situation to situation. Some people have a smooth and painless application, others do not.

• The obligation is on the employer to register employees, assist in arranging work permits and even withhold and pay their own income taxes.
• The same is true for contracts with freelancers or consultants.

• You need Sole Proprietorship.
• You wish to own and operate all of the assets of the business.
• As sole proprietor, you take the entirety of any profits but are also liable for any losses and debts.
• This is a popular option for many small owner-operated businesses (restaurants and bars for example).
• Sole Proprietorship offers some tax advantages. For example, according to legal firm DFDL, sole proprietors whose turnover does not exceed on average $5,000 per month will not be required to pay any tax – be it corporate or patent tax.
• With the recent overhaul of the tax system, and the abolishment of the estimated regime, sole proprietors whose annual turnover exceeds $5,000 per month, on average, will now be required to charge VAT, file monthly and annual tax returns, collect and pay certain withholding taxes and be subjected to tax audits whereas previously they would probably have negotiated their taxes upfront with the tax officer (under the estimated tax regime).

• Cambodian based partnerships have two possible options for official classification: The General Partnership and the Limited Partnership:
• A General Partnership is similar to a sole proprietorship, but your business involves two or more people combining their efforts and/or assets.
• You and your partners carry the same legal liabilities when it comes to debts and obligations.
• Partnerships are a popular type of business entity for professionals such as doctors.
• A Limited Partnership, on the other hand, means that one or more of the partners in your business merely contribute capital to the business while the other partners retain the general designation.
• By becoming a limited partner you are liable only to the extent of the capital you have contributed.
• If you are seeking to have, or to be, a silent partner, then a limited partnership may be the most appropriate option for you.

• A Limited Liability Company offers limited liability for you and your shareholders, which can number up to 30. This classification shall protect you from personal liability for any debts that the business may incur, as it has its own distinct legal identity and exists independently of its shareholders.
• The three types of limited liability companies available are: Private Limited Company, Single Member Limited Company, and Public Limited Company.
• A Private Limited Company is a form of limited company that may have from 2 to 30 shareholders.
• When a Private Limited Company is established by one person, it is known as a “Single Member Limited Company.”
• A Public Limited Company (PLC) is possible also, now that the Cambodian Stock Exchange is operative. A PLC is authorised by law to issue securities (shares) to the public. Before your company can be considered for flotation on the stock exchange, you must show it adheres to various financial and accounting standards, and demonstrate that it has set out the corporate structure in a memorandum and articles of association.

• Foreign Companies have three possible options for official classification: As a Subsidiary, a Branch Office or a Representative Office:
• Subsidiary is possible only if your business is a limited and locally incorporated company with at least 51% of the shares held by the foreign parent company.
• In order to create a subsidiary, a memorandum and articles of association must be provided thus ensuring the limited liability of the parent company.
• A Branch Office is possible if your business is an extension of the parent company thus maintaining liability with the parent company.
• A branch office may conduct business activities in Cambodia in the sectors in which it is registered.
• It can buy and sell goods, sign contracts, build things, render services, and generally do everything that a regular Khmer business can do.
• In this case the parent company is liable for all the branch’s debts and obligations.
• A Representative Office, on the other hand, offers you a more tentative step into the Cambodian market, allowing investors to test the waters before committing fully.
• A representative office is not allowed to buy and sell goods or offer paid services to customers.
• It can, however, gather information for the parent company and enter into contracts on its behalf; and source but not purchase local goods and services.

• In order to register any business with individual shareholders, a valid visa must be obtained for the Chairman or CEO who will represent the company.
• One of the shareholders will need to have a local bank account and deposit the minimum capital requirement of $1,300. The local bank will issue a confirmation letter, which must be provided to the Ministry of Commerce as part of the company incorporation process. This can generally be withdrawn once the confirmation letter has been issued.
• Note that although in law the minimum capital requirement is $1,000, the Ministry of Commerce in practice requires $1,300 as a minimum, and furthermore the Tax Department generally requires at least $5,000 in minimum capital. Therefore it is best to state a minimum capital of $5,000 in the Articles of Association, despite the initial requirement of only $1,300 needed to fulfil the bank confirmation letter requirement for the Ministry of Commerce.
• There are no restrictions to a business being 100 percent foreign owned.
• This is not to be confused with Cambodian land ownership, in which a foreigner can generally own a maximum of 49 percent. However, it is possible for a foreigner to have a long-term lease.
• To register a company in Cambodia the name must also be registered with the MoC.
• To receive the company’s constitutive documents—which include the certificate of incorporation, the Articles of Association, and the business license—you will need to register with the Ministry of Commerce (MoC). The process can now be carried out online here.
• Within 15 calendar days of having registered with the MOC, the new enterprise must register with the GDT. At the GDT, you will obtain the tax patent and the VAT certificate of the new company.
• Under Prakas No. 496—which came out in 2016 and abrogated a previous and much controversial Prakas—the chairman of the board of directors of the enterprise is not obliged to pay a visit to the GDT in order to receive the Patent Tax Certificate and/or the VAT Registration Certificate and/or the Tax Registration Card—as was the case under Prakas No .1139. Instead, he or she can issue a Power of Attorney to authorize any member of the board of directors to be photographed and have his fingerprints taken on his/her behalf.
• Finally, all enterprises must pay a visit to the Ministry of Labour and Vocational Training (MLVT), which registers the company under the Labour Law, provides workbooks for Khmer employees and work permits and employment cards for foreign workers. If the new company has more than eight employees, they must also be registered under the National Social Security Fund.
• The World Bank latest estimation is that it takes 99 days for the whole process to be completed.

For more information, read our latest article on the subject.

• Research conducted in 2017 by the World Bank in conjunction with the International Finance Corporation revealed it takes an average of 99 days to go through the nine procedures required to incorporate and register a new firm in Cambodia, and costs on average $615.
• Many business owners have said the process can be quicker – from just one week to a month, especially for small and mid-sized companies where there is less paperwork involved.
• The process can go very smoothly if you’re well prepared.

• To shorten your application times and possibly reduce administration costs, know exactly who to approach within the relevant Cambodian ministries.
• Use a knowledgeable local liaison as an intermediary in the process as ideally they can speak Khmer and will have a prior relationship with the particular Cambodian Government department.
• Remember payment of “facilitation fees” to shorten the timeframe of registration, while for many years regarded as common practice, is now a contravention of Cambodian law.
• New enterprise owners are best recommended to seek expert advisory services.

• It is your responsibility, as business owner, to obtain the correct licences from the correct ministries for your type of business.
• There are 26 ministries in the Royal Government of Cambodia, which collectively regulate a broad range of industry sectors and other activities.
• Prices vary considerably – but as an example you might pay from $150 to $300 for a restaurant licence.
• Licences are generally renewed annually.
• Failures to obtain correct licences, or renew current licences, can result in fines or the business being closed.
• If your wish to expand your company’s activities into new areas, you must obtain the correct licences for any expansion from the correct ministries.
• Identical processes are necessary for any business expansion or modification.
• If in doubt, seek expert advisory services.

• The Law on Financial Management 2016, promulgated on December 17, 2015, abolished Cambodia’s former two-tier tax system, dropping the more informal Estimated Regime. As such, the country is left with a unified, one-regime system that will widen the taxpayer base, with all enterprises obliged to be registered under it.
• Businesses have 15 days after registering with the MoC to also register with the Department of Taxation to receive a Taxpayer Identification Number (TIN) and to register to pay Value Added Tax (VAT).
• When registering for the TIN, the company must also pay an annual business registration tax, known as a Patent Tax, for its first year of operation, though the figure is reduced if the business is registered after July 1.
• If a business is planning to engage in multiple activities, individual taxes are due on each separate business activity, as well as for each of the company’s locations.

• Following registration at the Ministry of Economics and Finance (MEF), the company is liable to pay various taxes each month, usually payable by the 15th of the following month, with the exception of VAT, which is due on the 20th.
• Payments must be accompanied by a signed declaration, together with copies of all invoices either issued or received by the company during the tax period.
• In addition to monthly tax filing, the company is required to file an annual return known as a “Tax on Profit” return. This is due no later than March 31.
• Following registration at the Ministry of Economics and Finance (MEF), a company is liable to pay various taxes each month, usually by the 20th. They include the tax on salary; the prepayment of profit tax (equal to 1% of turnover); and VAT (equal to the total VAT charged to your customers minus VAT payable to your suppliers).
• Following a recent revision of the 2017 Financial Law, all companies maintaining proper accounting records are exempt from paying the 1% Minimum Tax (MT exemption). Previously, only Qualified Investment Projects (QIP) were eligible for the exemption.
• Payments are first made to the bank and will be receipted. Once payment is made to the bank, the taxpayer lodges two copies of the return and the bank receipt with their local tax branch and, if accepted, a yellow receipt of tax lodgement and payment is provided with one copy of the return back to the taxpayer.
• The carried forward losses record in the books of account for the taxpayer is sometimes an unknown issue to the business owner. By law, it becomes null whenever there is a change of business activities or ownership. But as long as the ultimate ownership does not change, the taxpayer can apply for carried forward losses by sending a request letter to get confirmation from the Ministry of Economy and Finance.

• Tax registration can be completed at a provincial tax branch instead.

• Individual taxes are due on each separate business activity, as well as for each of the company’s locations.
• The tax is due thereafter on a yearly basis every January.

• The Law on Financial Management 2016 abolished Cambodia’s former two-tier tax system, dropping the more informal Estimated Regime. As such, the country is left with a unified, one-regime system that should widen the taxpayer base.
• Additionally, the remaining tax regime (known as the Real Regime) has been restructured, with taxpayers now divided into three categories according to income: small, medium and large taxpayers.
• There is still a long way to go to complete this transition, with only around 40,000 SMEs—out of an estimated 600,000 operating in the country—having registered with the DGT.

• Value added tax (VAT): Any VAT invoiced by your company during the taxable period (typically 10% of net invoice value) is payable to the tax department, net of any VAT paid by the company to its suppliers during the same period.
• Prepayment of Profit Tax: An amount equal to 1% of turnover is payable. Any such tax paid is deducted from your company’s profit tax bill at the end of the year.
• Withholding Tax: As a taxpayer, you are required to withhold tax from payments made for services purchased from non real-regime entities, and in certain other circumstances. The amount to be withheld varies according to your particular situation, and can be as much as 15% for consulting or management service.
• Tax on Salary: Your company must pay taxes on any salaries paid to resident employees. Tax rates vary from 0-20% – with the top band coming into effect at a monthly salary of KHR 12.5m (approximately US$3,125). Non-resident employees are taxed at 20% of any salary sourced in Cambodia, and fringe benefits are also taxable at 20%.
• Tax on Profit: This is the debt of a resident taxpayer on income from Cambodian sources as well as from foreign sources. Audits may occur anytime within a three-year period of the submission of monthly or annual tax returns.

• Remember for a non-resident taxpayer, this tax is assessed on income from Cambodian sources only.
• The profit tax is payable annually and is imposed at a rate of 20% in most circumstances, though the tax rate varies for certain industries such as oil and mineral exploration and insurance.
• Full details of tax liabilities can be found on the website of the Cambodian General Department of Taxation by visiting tax.gov.kh.
• Any concerns you may have over taxation can be offset through the use of a trained accountant and strict adherence to the law.

• As an emerging market that is home to a growing population with increasing expendable income, Cambodia is quickly becoming an attractive destination for franchise businesses.
• International brands enter Cambodia and encounter a local market demonstrating an automatic assumption of quality and affinity toward their products.
• The benefits for new franchisers are that franchises typically come with a well-documented guide to operations, together with training from the franchising company, enabling the business to perform at international standards of quality and service almost immediately after opening.
• The franchising company may also provide support in areas such as management of accounts, sales, advertising and so forth.

• The first franchise to operate in central Phnom Penh was Thailand-based The Pizza Company, which was started in 2005 by EFG (Express Foods Group), followed by Swensen’s, BBQ Chicken, Dairy Queen and Costa Coffee.
• Other international names include Starbucks, KFC, Gloria Jean’s Coffee, Spinelli, Burger King, Mazda, BMW, Rolls Royce, Dominoes Pizza and the country’s first Hard Rock Cafe, which opened in Siem Reap.

• You’re best to come prepared with a well-documented guide to operations, together with training from the franchising company; that way, the business can perform at international standards of quality and service in Cambodia.
• As franchiser, you may also provide support in areas such as management of accounts, sales, advertising and so forth.
• It is also possible to sub-franchise or create a joint venture: such as ANZ Royal Bank, a joint venture between ANZ Bank and local conglomerate the Royal Group of Companies; and Cambodia Angkor Air, a joint-venture between the Royal Government of Cambodia and Vietnam Airlines.

• If you don’t declare bankruptcy or the business is never formally dissolved, you will leave behind a legal entity, a “ghost company” that can be sued even though there might not be any remaining assets.

• There are two steps you must complete. First, send a letter informing the Tax Department that the business is planning to close. Within 1 – 2 months, an auditor is sent to the company and this is when any pending tax issues will be addressed. Once the Tax Department has approved the first step by issuing a certificate, the company must formally close the business down at the Ministry of Commerce, and then they will receive a Certificate of Closure.
• As with registering a business, the process for dissolving a company can now also be done online. For more information, click here.

• A company can face court supervision of the liquidation if it does not properly satisfy all its obligations.
• Those include paying employee salaries, outstanding debts and due taxes.
• The legal entity continues to exist until the date shown on a certificate of dissolution, issued by the MoC.
• In addition, an official audit by the Department of Taxation is often necessary.

• In short: self-contained, fully serviced areas possessing special economic regulations.
• The Cambodian government created and formally introduced SEZs in 2005.

• SEZ regulations are generally market-oriented and conducive to foreign direct investment.
• Including tax incentives and lower tariffs.
• SEZs offer facilities such as roads, power generation and distribution, water supply, sanitation and sewage systems, telecom networks and so forth.
• Each zone contains a production and service area and may also include a residential area to for workers.
• SEZs offer a one-stop service for imports and exports, with government officials stationed on-site to provide administrative services.
• Applications to establish factories are dealt with on-site, as are clearances, permits and authorisations.

More details can be found at cambodiainvestment.gov.kh

• In 1994, the Government passed the Law on Foreign Investment in the Kingdom of Cambodia with the aim of streamlining the foreign investment regime and providing generous concessions and incentives for such investment.
• The law also established the Council for the Development of Cambodia (CDC), and made it the highest decision-making level of the government for private and public sector investment.
• The CDC has two operational arms: the Cambodian Investment Board (CIB) and the Cambodian Special Economic Zone Board (CSEZB), which together act as “one-stop service mechanisms“ to evaluate and approve applications for Qualifying Investment Projects.
• The CIB deals with investment projects outside of special economic zones (SEZs) and the CSEZB takes charge of projects within the SEZs themselves.

• The Ministry of Commerce (MoC) and the Council of the Development of Cambodia (CDC) are collectively responsible for overseeing foreign direct investment (FDI) and business development in the country.

• FDI projects eligible for business incentives are known as Qualified Investment Projects (QIPs) and must be registered with the
• All FDI require an initial investment of at least US$1 million.
• Though very large projects with investment capital over $50 million or those involving the exploration and exploitation of mineral and natural resources will also require approval from the Council of Ministers.
• Certain other kinds of projects will also need to gain approval.

• QIPs fall into four main categories: contracts, transfers, ownership, and state management.
• Within these four categories, various separate “schemes” are possible including: Build, Operate & Transfer (BOT), Build, Lease & Transfer (BLT), Build, Own, Operate & Transfer (BOOT), and Build, Own & Operate (BOO).

• To qualify as a QIP, your project must first obtain a Conditional Registration Certificate (CRC), after which a Final Registration Certificate (FRC) will be issued.
• The CRC should be issued within three days of receipt of the proposal (if the initial decision of the CDC is favourable).
• The CDC then has a further 28 days to obtain the required approvals, authorisations, licenses, permits and registrations on behalf of the investor, and issue the FRC.
• As indicated earlier, only projects over a certain size can apply for QIP incentives, though very large projects with investment capital over $50 million, or those involving the exploration and exploitation of mineral and natural resources, will also require approval from the Council of Ministers.
• Certain other kinds of projects will also need to gain approval.

• In terms of incentives, QIPs can select between a profit-tax exemption (eliminating any tax on profit for a specific number of years) or a depreciation allowance of 40 percent on the value of the properties used in the production or processing.
• With certain exceptions, imported production equipment and construction materials are tax-exempt, as are goods manufactured for export.