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Business Startup

Are you considering starting a new business in Cambodia but need more information?

Look no further. You’ll find everything you need right here. From how to open a business in Cambodia, necessary licenses, calculating and paying tax; right through to how to close your company when you’re finished.

If you can’t find you’re answer here, just ask us at B2B and we’ll point you in the right direction.

The AEC membership’s positive impact on Cambodia’s business environment could be:

  • 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.
  • 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.
  • 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 5,866 in 2013 to 6,075 last year—4,829 of which were registered by foreign owned businesses.
  • There were 513,759 non-street businesses in Cambodia as of 2014, however, only 10,565 of these are registered.
  • When the Ministry released these statistics this year, they attested that the increase indicated a change in investors’ perception of Cambodia as a stable place to do business.
  • 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 184 out of 189 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 simple tax system offering several incentives, especially in select industries and those operating from a Special Economic Zone.
  • Companies can be 100% foreign-owned.
  • 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.
  • You need an application form for a Memorandum and Articles of Association (MAA) which you get from the Ministry of Commerce (MoC).
  • This form must be signed by all share-holders and directors in front of the MoC, a public notary or Cambodian lawyer.
  • Once the MoC recognises a company, it issues a Certified MAA, MoC business licence and commercial registration certificate.
    More details are available on the MoC website and, as of late 2015, it is now possible to apply to register a business online via this site.
    If your business will operate in the “real” tax regime you will also need to apply to the Ministry of Economy & Finance (MEF) to request a VAT number and certificate.
    Historically it has taken up to three months to complete the procedures required to legally operate a business in Cambodia.
  • 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 14 days of registering with the MoC, businesses must register with the Ministry of Economy and Finance (MEF) and Department of Taxation to receive a taxpayer’s identification number (TIN).
  • When registering for a TIN, the company must also pay an annual business registration tax, known as a Patent Tax, for its first year of operation, and annually thereafter. This costs in the region of US$300.
  • Various taxes are also payable each month, usually on the 15th. These include salary tax; withholding tax (where you have purchased a service from a non-registered business; 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).
  • By law, if a Cambodian based company fulfills 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.
  • It’s hard to be specific on the timeframe, as there are many variables involved, such as the size of an operation, licenses required, construction and equipment needs, and so on. However, it takes an average of 101 days to complete the procedures required to legally operate a business in Cambodia.
  • Research conducted in 2012 by the World Bank in conjunction with the International Finance Corporation revealed it takes an average of 85 days to go through the nine procedures required to incorporate and register a new firm in Cambodia, and costs on average $834.
  • 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.

Business Start-up Top Tips

B2B call on our panel of experts to share what they have learnt about setting up shop in Cambodia.

  • 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.
  • Keep in mind Cambodia remains an emerging market and may behave differently to more established markets.
  • Make the effort to understand not only the market, but 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).

Cambodian Visas & Work Permits

If you want to work or set up a business in Cambodia, first thing you will need is a valid Visa and a Work Permit.

  • The “ordinary” visa can be purchased upon entry to Cambodia for $25 but is valid for only one month.
  • Once you’re in the country, this can be easily renewed indefinitely on a 3, 6 or 12 monthly basis (most local travel agencies can arrange this, costing about $280 for a year).
  • You can only gain a multiple entry visa when applying for a 6 month or 12 month E class visa.
  • Under the 1997 Labour Law (as amended) and the 1994 Immigration Law, foreigners who wish to work in Cambodia are required to have a valid E visa issued by the Cambodian embassy, consulate or immigration authorities at the port of entry.
  • The most recent laws that formally govern work permits are Prakas No. 195, 20 August 2014, “On Work Permits and Employment Cards for Foreigners”; and  Prakas No. 196, 20 August 2014, “On Employment of Foreign Labor”.
  • Employees must have a work permit and an employment card issued by the Ministry of Labour and Vocational Training. The process demands that business owners first must register their company.
  • When registering a business in Cambodia, the Company must make a “Declaration of Opening a Business” in writing and deliver it either to the Ministry of Labour and Vocational Training for companies with more than 100 employees or to the Department of Labour and Vocational Training for 100 employees and less.
  • Having done this, the company must register all of its staff with the DOL. Don’t forget, this includes both foreign and Khmer staff.
  • If the Company wishes to use foreigners as employees, the Company must request a permit for employment of foreign labor (Quota). This is done by both a Request Form and a Request Table, for use of foreign workforce.
  • If the rate of foreign labor exceeds 10 percent of the total employees, a request letter must be sent which thoroughly and clearly explains the positions in excess of the quota and the specialty and professional skills of each of these foreign workers. A penalty payment normally applies for each worker in excess of the quota.
  • Foreigners are issued a Foreign Work Permit and Foreign Employment card.
  • Although by law the Company is required to make a declaration in writing each time an employee is hired or dismissed, in practice the Company should register new employees as they are hired and provide the work book and card to departing employees.
  • Labour Inspectors routinely update the company’s labour records for incoming and outgoing employees when the company is audited.
  • Once the company and staff are registered, workbooks will be issued for all staff. After registration, however, the Department of Labour can request staff status updates.
  • As part of this process, the DOL ask for extensive details about employees listed for a company, including foreigner quotas, and expect this information to be updated every time the employees of a business change.
  • This may be a somewhat expensive process, especially if you employ a large number of staff at your company, and if your registration is long overdue.
  • While this was once an unenforced law, Government inspectors have now begun foreign labour inspection at workplaces in order to fully enforce the law, including a comprehensive review of the declaration of personnel and its updates, quota approval for foreign labour usage, employment contracts for foreigners, employment cards and work permits, valid passports, valid visas of the appropriate type, and foreign workers themselves.
  • Non-compliance can lead to a fine and/or imprisonment. In order to get a business visa now, one also needs to be able to show a valid work permit.
  • The obligation is on the employer to register employees, arrange work permits and even withhold and pay their own income taxes.
  • The same is true for contracts with freelancers or consultants, which are subject to a withholding tax of 15%.
  • See the Legal & Accounting section for further information.

Cambodian Business Classifications

There are various Business Classifications available in Cambodia here we help you understand how to classify your business.

  • You need a 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 tax advantages as the business does not have to register for VAT if turnover remains below a certain threshold.
  • Such businesses usually pay their local tax department based on an estimate of their turnover.
  • 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 contributes 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 Cambodian based company has three possible options for official classification: Public Limited Company, a Single Member Limited Company or a Limited Liability Company:
  • 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.
  • A Single Member Limited Company is a Limited Liability Company run by a single member.
  • 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.

Cambodian Company Registration

  • 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, the company name must also be first approved by the MoC. The Ministry of Commerce registration takes about three weeks and upon completion the main documents issued are the Certificate of Incorporation and Articles of Association. The company then has 14 days to commence registration with the Tax Department.
  • Registration with the tax department requires the Chairman or CEO representing the company in Cambodia to be finger-printed and photographed at the General Department of Taxation.
  • Once the business is registered with the Ministry of Commerce and General Department of Taxation, the business must immediately register with the Department of Labour, declare its employees, and obtain the appropriate working documents for both its Khmer and Expatriate staff.
  • The main constitutive documents the Ministry of Commerce (MoC) provides are the Certificate of Incorporation and Memorandum and Articles of Association (MAA) for use by any corporation.
  • An application form is needed and the process generally takes 30 days after it has been signed by all shareholders and directors and submitted to the MoC.
  • Individual shareholders and Directors are required to provide passport copies, photos, addresses and telephone numbers, and the Chairman or CEO representing the company is presently required to have a residential lease in Cambodia with a stamp from the Sangkat local government office, which in turn issues a Residency Letter.
  • The estimated timeframe for tax registration is presently two to four months, at which time a Tax Patent and VAT certificate will be issued as well as a Blue Letter informing the company of the date on which they are required to file monthly tax.
  • To register a company one must also register the name with the MoC, where you can check to see if the name you want is available.
  • 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.
  • Failure to obtain corrects 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.

Cambodian Tax Registration & Obligations

Find out what taxes your Cambodian business will need to pay and how to pay them.

As of November 2014, requirements have changed for patent tax registration for all existing and newly incorporating companies. These new requirements are being actively enforced, much to the dismay of some foreign-owned businesses currently operating in Cambodia. Under the new regulation, company representatives must fulfill certain obligations not previously required. The information below covers these changes, however, for regular updates head over to b2b-cambodia.com.

  • Certain types of business entity (Limited Companies and Limited Partnerships among them) are deemed to fall within what is known as the “real tax regime”. Other, typically smaller, businesses can fall within the “estimated regime”.
  • Businesses have 14 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. There are four main tax forms: Withholding Tax, VAT, Tax on Profit and Tax on Salary, along with the accompanying Sales and Expenses schedule.
  • 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 lodgment and payment is provided with one copy of the return back to the taxpayer.
  • The carried forwarded losses record in the books of account for the taxpayer is sometimes an unknown issue to business owner. By law, it becomes null whenever there is 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.
  • Most types of business entities (including Limited Companies and Limited Partnerships) are deemed to fall within what is known as the “real tax regime”.
  • 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, also known as the “minimum tax”. 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.
  • Smaller business entities such as sole proprietorships and general partnerships are usually deemed to fall into the “estimated tax regime” and instead pay tax to the local commune.
  • 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.

Franchises

Do you have a Franchise you would like to introduce to Cambodia? Now is a great time.

  • 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 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.
  • New brands continue to flood into the market. Starbucks has announced it’s opening a branch at Phnom Penh airport.
  • 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.

Closing a Business in Cambodia

If you decide to close a business in Cambodia, there are a few things you had better keep in mind.

  • 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, then they will receive a Certificate of Closure.
  • 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.

Special Economic Zones (SEZ) in Cambodia

What exactly are Special Economic Zones and how can they make business easy in Cambodia?

  • 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.

Qualifying Investment Projects

Here’s how to get the official go-ahead for your investment plans and projects.

  • 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.
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40 COMMENTS

  1. Dear Business Friends,

    I am Jeudina a businesswoman here in cambodia, I’m looking for a partner to expand my company’s service of Freight forwarder and custom clearance. Currently, we have a transportation services (by Trucks) and our company is already registered. For those who has strong experiences in Forwarder and custom clearance, Please contact me as below contact:
    Tel: +85512232223 / +855070700444
    Email: jeudina1611@gmail.com

    I will be happy to have a meet and talk over our business plan. Thanks

  2. I am Cambodian people

    Do you have business consultation/Adviser, coz now i was run business (small Guest House) at Siem Reap 4 month ago but still not good.

    This is my first business I want to survive it, if still like currently am sour that it will be close because I don’t have more money for continue . Please help me….

    The best regard

    Vannet

  3. We would like to set up a trading company in Phnom Phen,
    Please advise us the below:-
    1.What are your fee cost of setting up a company in Phon phen
    2. In how many days it would be ready
    3. How many days would it get ready?
    4. How much money ( investment )is it needed to start the company.
    Please reply to my email param2064@gmail.com

  4. Dear Sir,
    Hello, I’m kail from CHINGNIC. I’m looking for a Cambodia local Start-ups registration supplier. In fact,our business is more or less the same as yours.CHINGNIC (HK) Consultancy Co,Ltd is located in China,which is dedicated in management consulting,registration. And we are nowlooking for a long-term Israel local partner to help do the business.Therefore,our global business will be easy and convenient.

  5. Dear B2B !
    I’ve some issues who need you to solute us. Because my company have many questions and we don’t know their required.
    Our Company wants Import Export of material of Agriculture, for example : Mainz, Soy bean Meal, Rapeseed Meal, Palm Kenel, Canola meal, DDGS, Rice Bran, Rice Bran Extruction, Wheat, Wheat bran Pellet..
    So please kindly to show us about the License who have.
    Sincerely,
    Tit Ra

  6. Hi,

    Is it possible for a foreigner to create and 100% own a sole proprietorship in Cambodia and be able to hire staff after ? (the business I intend to create is web development services)

    Thank you for your help

  7. Dear

    I plan to open the women shoes shop in Cambodia
    Could I get the advise from anybody here about the procedure with Government in Phnom Penh

    Appreciate for your advise

    Warm regards, Vu

  8. I am interested in setting up a business in Cambodia and I am looking for information about vat and duty on import from China. We will be importing woven textiles from China, process them further (coating) in Cambodia, and export it to EU and US. 100% of our production will be exported. We will buy supplies and services in Cambodia and provide local jobs.

    We will be happy to pay company tax in Cambodia but it’s absolutely crucial that we don’t pay import duty or vat on the textile from China which is subsequently exported and taxed in EU and US.

    Can anyone tell me if this can be done? We would much prefer to stay away from any export processing zone / special economic zone if at all possible.

    many thanks
    CC

  9. Dear Thuch,

    I am working of agricultural business in Cambodia such as Tapioca chips which has highly ordered from buyers/customers and plan to expand to other business. If you are interested making joint with me.

    Please contact me.

    Thanks
    Son

  10. HI Frank,

    My name is PHIRA, I am a Cambodian businessman! Yeah, I think this is possible to operate your specialized tourist business in Cambodia. Now I’m looking for a partner to join. My wife has experience in this industrial. If you are interested or need help, Please kindly contact me via E-mail: hamphirabiz@gmail.com or Mobile: +85510588358

    Best regards,

    PHIRA

  11. I am Australian and want to operate a specialised tourist business is Thailand. It is just too hard to open the business in Thailand, and the tax and overheads are too high in Australia. Do you think it would be possible to open a business in Cambodia, deposit the proceeds in a Cambodian bank, but essentially operate the business in Thailand. It is a low volume business.
    Thanks

  12. Dear Dany,
    I am so interested in the announcement that you want to find the a partner to expand your business in Cambodia. I am just a micro business in POIPEt city. We can talk detail if you interested.

    Regards,
    Thuch

    • Hi Thuch,

      Good day! I would like to get connected with you as you are already doing some business there in Cambodia. I would like to discuss with you on my business and take this forward. Please contact me via Skype. My Skype Id is aadverb.

      Thanks
      Andy

  13. Hi, I am thinking of setting up business in Cambodia and wonder whether is there any rules or restrictions when come to repatriation of money back to my home country.

    As I know country such as China, their government restrict amount of money to repatriate back to the home country and also impose heavy tax. What about Cambodia, is there such rule implemented?

    Thanks

  14. Hi guys,

    I was wondering about my new business set up first time. As my business just small size and related to tour company in Cambodia. Do i need to have business license? as i heard many people said running the business license is so expensive could start from 2000 USD to 3000 USD, is it true? First, I only thought to have my own small private business. Please help me to find out all these related informations.

    Thanks

  15. Dear all, if you all know of any small eco businesses that need investment to start up or expand in Phnom Penh. Please go to aseic.org/eircc2014 for more information. Application deadline is this Thursday, the 21st of August.

  16. Hi we are considering opening an office in Cambodia next year, we specialise in Electrical, Lighting and Solar PV systems. We have been operating in Thailand for the past 13 years but are looking to expand our brand… If anyone is interested to chat with us regarding a partnership (local, Cambodian), please contact us thru our email address..

    Thanks,

  17. I am very interested to be your good friend and want to run business together with you about used car or parts from Korean.

    I want to know what requirement or s.th that you need to run that business.
    You can contact to me to share some information what you need.

    My name is Sopheak.
    Contact information
    email: cheasopheak.cam@gmail.com
    mobile: +85567777055 / +85577574797

  18. I want to meet one of good friend in cambodis who can work
    business together about korean used car parts
    I had been many times country of cambodis

    looking forward from cambodian friends….
    with best regards
    ws. chon

  19. hi.can anyone help me. im looking for a company that does company formations and help with opening bank account.. i dont want to do this work i just want my company trading. can someone help who does business start ups. thank you

  20. Hi,

    Our company is a registered QIP/CDC certified. However, do to our unique company products, we were subject to pay for 1 year of Material Import. whereas, our Equipment were 100% tax free.
    1 Year has passed, as the CDC letter stated that we will be able to Import Tax Free, But so far that the Logistic Company confirm that MOC approval is needed. It is currently reviewing our case
    Could you tell me if this is happening often in cambodia? or something is wrong with our Logistic?

    Secondly, If we would like to expend our business activities to sell different products from our registered business. what and which ministry or company could you recommend for us to register this for?
    Also, does Cambodia Government provide a list of manufacturing for us to register? We would like to expend into different sector/industrial to prevent future trouble.

    Sincerely,
    Wang

  21. Hi,

    Thanks for this great to the point and clear info.

    I have been living in Thailand for over 10 years. Came with the intention to start a business, but never did. TOO MANY silly rules.

    If I understand correctly, I could “easily” start a new business in Cambodia, Sole Proprietorship to start with.
    I will be able to work in my own business, to start with as the ONLY worker. Hopefully later hire locals to expand.

    My business is internet based, design/advertisiment/marketing.

    I know the above is basic info, but compared to Thailand, Cambodia seems like a breeze to start a one man business (not even possible in TH)

  22. Dear Sir,

    I have read conflicting information regarding the set-up of a business and obtaining a import/ export license. If I set-up a business does the export license come with the business license? Or do I have to apply for independently?

    • Dear Brad,

      As well as registering with the Ministry of Commerce (MoC) and Ministry of Economy and Finance (MEF), a newly established business should be sure obtain all the necessary licenses in order for it to operate. This also applies if a business expands its activities into a new area. Certain licences, such as for import and export, are already built into the MoC registration, though others must be purchased separately. Licenses are issued by whichever ministries are relevant to the activities in which the business is engaged.

  23. . Kindly email me fees and procedures to set up a foundation in Cambodia. We would also require a nominee to represent that foundation. Kindly revert to us as soon as possible. I meet my Client at 3pm tomorrow. If I could receive the information before then, that would be great;

  24. Hi! I was wondering if you know the amount of money that is the legally required initial capital for starting a business? Does it vary by different business? If it does, could you give me an estimate? Thanks so much!

  25. We are now importing spices from opfficial farmer;s cooperatives in Cambodia and shipping to USA through freight forwarders/consolidators in PP. We have no presence in Cambodia. Do we need one? Money is wired directly to Farmers Association from our USA Banks.

    Do we need a presence at all in Cambodia?
    If so, Do we need a Representative Office in Cambodia
    or a Branch office.

    USA Company is Sole Proprietor

    Can you handle the paperwork?

    James Turley

  26. Dear Sir,

    May i know waht sort of business entity available for foreigner to start business in Cambodia e.g. Private Limited company? or any other form?

    May i know what is the cost for start up a company and what is the annual compliance cost?

    Regards,

    JW