The Comprehensive Capital Gains Tax – CGT Regulation Enacted – A Critical Overview In Collaboration With the Center for International Taxation Studies

Introduction

Capital Gains Tax (“CGT”) for individuals was first introduced in Cambodia under the Law on Financial Management for 2007, representing an early legislative step toward taxing profits derived from the disposal of assets. Over the years, this initial framework was progressively refined through subsequent regulations, notably Prakas No. 346 MEF.Prk dated 1 April 2020, which outlined preliminary implementation procedures, and Prakas No. 228 MEF.Prk dated 23 March 2022, which provided additional technical guidance. However, the onset of the COVID-19 pandemic led to repeated delays in enforcement, as the government sought to minimize economic disruption and provide taxpayers with more time to prepare.

As of July 2025, the Ministry of Economy and Finance has enacted Prakas No. 496 MEF.Prk (“Prakas No. 496”) dated 18 July 2025, marking a significant milestone in the development of Cambodia’s tax system. This comprehensive regulation brings much-needed clarity and certainty to the CGT regime, aligning Cambodia more closely with regional practices in Vietnam and Thailand. The Prakas introduces detailed rules on the scope, calculation, exemptions, and administration of CGT, enhancing the transparency and predictability of the tax environment. The Prakas will be effective and applicable to the following assets:

• Non-immovable assets (e.g., investment assets including shares, IP, leases, goodwill, and foreign currency): Effective from 1 September 2025.
• Immovable property: Effective from 1 January 2026. Therefore, physical persons’ gains from immovable property are exempt until the end of 2025.
• Indirect share transfers will be governed by separate regulations.

The CGT regime is expected to make a meaningful contribution to domestic revenue mobilization by expanding the tax base to include capital gains realized by resident individuals and non-residents holding assets in Cambodia. At the same time, the Prakas preserves a range of targeted tax exemptions, particularly in priority sectors such as agriculture, securities markets, and manufacturing, in support of broader economic development and investment promotion goals.

This tax update is divided into three parts for clarity:

• Part 1: Critical Overview of the CGT Regime (which is the focus of this article)
• Part 2: Computation and Filing Requirements