July 30, 2024
In May and June 2024, Cambodia’s General Department of Taxation (GDT) issued two notable tax incentive packages that aim to encourage business growth in the country. The details of these incentives are outlined below.
Tax Incentives for Expansion of Qualified Investment Projects
The GDT’s May 10, 2024, regulation (Prakas No. 313 MEF. PrK. PD) provides income tax incentives for expansion of qualified investment projects (QIPs), including an income tax exemption for the following types of expansion:
Expansion of existing production.
Expansion through product line diversification within the same lines.
Implementation of new technologies that enhance productivity or protect the environment.
Other forms of expansion set out in future sub-decrees.
The number of years for the income tax exemption depends on the investment activities of the QIP, in accordance with the business groupings provided in the Sub-Decree on the Implementation of the Investment Law in Cambodia—9 years for group 1, 6 years for group 2, and 3 years for group 3.
After receiving approval for the QIP expansion from the Council for the Development of Cambodia (CDC) or one of its Provincial-Municipal Investment Sub-Committees (PMISs), the GDT will certify the income tax exemption period. The exemption begins on the date the enterprise first receives income from the QIP expansion.
QIPs seeking this tax exemption need to declare the amount of money that they intend to use for the expansion. Once allowed, the company must use that money for construction materials or new production equipment before the expiration of the tax exemption period.
The income tax exemption can be revoked if:
The enterprise does not use the capital to expand the QIP by purchasing the construction material and new production equipment as requested for the expansion.
The enterprise fails to invest the prescribed amount before the expiration of the tax exemption period.
The enterprise does not fulfill its other tax obligations as required by