Property taxes laws and regulations in Cambodia – sellers and lessors must have a working knowledge of these to make informed decisions. The same applies to buyers, investors and even tenants with regards property transfers, sales, leases, etc.
What is Property Tax?
Tax on immovable properties (land, apartment, etc.) must be paid each year by September 30th. The owner registers at his / her local tax branch and completes the PT01 and PT02 forms.
- PT01 provides information about the property
- PT02 is the tax application form
Original identification and property ownership documentation is required. Property Tax is calculated as 0.1% of the property value as determined by the Immovable Property Assessment Committee. Calculation is based on location, materials and government data. Owners must pay this tax if the property value is over $25,000 with exemptions for agricultural land, state land, and industrial locations.
Things you need to know about Transfer Tax
Buyers must pay Transfer Tax (or Stamp Duty), payable on completion of a sales transaction, calculated as 4% of the property value according to government valuation or the actual transaction price.
Where does the Withholding Tax apply?
This tax applies to rental properties and the tenant pays 10% Withholding Tax. The landlord is responsible for withholding this and the lessee acts as the withholding agent and pays on his/her tax return. When buying condos 10% VAT applies on the purchase price.
Who Pays Rental Tax/Income Tax?
Locals and foreigners who own and rent out properties must pay Rental / Income Tax annually. A foreign investor who buys property and rents it out pays 14% of the gross rate. For locals, the rate is 10%. If you want more reliable information regarding taxation, please get independent legal advice. It is important to protect yourself in relation to property taxes laws and regulations in Cambodia.
Capital Gains Tax
From 1 January 2022 the CGT (Capital Gains Tax) will be enforced. Set at 20% of the amount of gain realized (subject to deductions). The tax is to be reported and paid within three months of the transaction date relevant to the capital gain. The CGT appeared in Prakas 346 (1 April 2020) following which the Department of Taxation provided guidance on its implementation. So far, it hasn’t been enforced, but all this will change.
In short, a transaction will be subject to CGT if it refers to immovable property, finance leases, investment assets, goodwill, intellectual property, and foreign currency. The tax will apply to all taxpayers (both residents and non-residents including legal entities and nonresident individuals) that realize capital gains. Exemptions are available.
- The facts leading to the charge or expense have verifiable evidence;
- The results of economic activities related to the expense; and
- Invoices or documents as evidence to support expenses.
For immovable properties, taxpayers can choose between:
- Limited expense method (80% of sales proceeds are deducted)
- Actual method (actual expenses are deducted)
For other capital, taxpayers must only use the actual expense deduction method.
Important note: Where actual expense deductions exceed sale proceeds (i.e. a capital loss) this amount cannot be deducted from other assets.
Taxpayers must file and pay CGT for each transaction within three (3) months following receipt of a capital gain. Tax declaration format determined by the Tax Department.
- Identification card, birth certificate or passport (for foreigners);
- Family book, residency book or residence certificate (local residents);
- Certificate of principal residence of the taxpayer;
- Proper title, identification etc, issued by the cadastral office or relevant documents verified by the commune-Sangkat level authority and above, or recognition documents from the competent authority;
- Purchase-sale contract (SPA) or exchange contract or donation agreement;
- Payment invoices and other expenses invoices;
- Other relevant documents related to the sale or transfer of capital.
Important note: Resident taxpayers making capital gains on property located outside of Cambodia must pay the additional amount on the tax rate variant that is less than Cambodia’s CGT rate.