Investment activities registered as QIP are entitled to choose basic incentives under the following two options:

Option 1: Income Tax Exemption

  • Income Tax exemption for 3 (three) to 9 (nine) years, depending on the sector and investment activities, from the time of earning its first income. Sectors and investment activities, as well as the period of income tax exemption, shall be determined in the law on financial management and/or the Sub-Decree.
  • After the income tax exemption period has expired, the QIP is entitled to paying income tax at a progressive rate proportional to the total tax due as follows:
  • 25 (twenty five) percent for the first 2 (two) years;
  • 50 (fifty) percent for the next 2 (two) years; and
  • 75 (seventy-five) percent for the last 2 (two) years.

Further, this option includes:

  • Prepayment Tax exemption during income tax exemption period;
  • Minimum Tax exemption provided that an independent audit report has been carried out;
  • Export Tax exemption, unless otherwise provided in other laws and regulations; or

Option 2: Special Depreciation

  • Deduction of capital expenditure through special depreciation as stated in the tax regulations in force;
  • Eligibility of deducting up to 200 (two hundred) percent of specific expenses incurred for up to 9 (nine) years.  Sectors and investment activities, specific expenses, as well as the deductible period, shall be determined in the Law on Financial Management and/or the Sub-Decree;
  • Prepayment Tax exemption for a specific period of time based on sectors and investment activities to be determined in the Law on Financial Management and/or the Sub-Decree;
  • Minimum Tax exemption provided that an independent audit report has been carried out;
  • Export Tax exemption, unless otherwise provided in other laws and regulations.

In addition to the incentives of option 1 or option 2:

A.       Export QIP and Supporting Industry QIP are entitled to customs duty, special tax and value-added tax exemption for the import of Construction Material, Construction Equipment, Production Equipment and Production Inputs;

B.       Domestically Oriented QIP is entitled to customs duty, special tax and value-added tax exemption for the import of Construction Material, Construction Equipment, and Production Equipment. The incentives for Production Inputs shall be determined in the Law on Financial Management and/or the Sub-Decree.

Additional Incentives

In addition to the basic incentives, investment activities registered as QIP receive additional incentives as below:

  1. Value-added tax exemption for the purchase of locally made Production Inputs for the implementation of the QIP.
  2. Deduction of 150 (one hundred and fifty) percent from the tax base for any of the following activities:
    • Research, development and innovation;
    • Human resource development through the provision of vocational training and skills to Cambodian workers/employees;
    • Construction of accommodation, food courts or canteens where reasonably priced foods are sold, nurseries and other facilities for workers/employees;
    • Upgrade of machinery to serve the production line;
    • Provision of welfare for Cambodian workers/employees, such as comfortable means of transportation to commute from their homes to factories, accommodation, food courts or canteens where foods are sold at reasonable prices, nurseries and other facilities.
  3. Entitlement to income tax exemption for the Expansion of QIP which will be determined in the Sub-Decree.

Special Incentives

Any specific sector and investment activities having high potential to contribute to Cambodia’s national economic development may receive specific special incentives to be set out in the Law on Financial Management.

The new Law on Investment provides tax exceptions on imported capital goods for both QIPs and Supporting Industry QIPs. However, the incentives are different between the Export QIP and Domestically Oriented QIP. The Export QIP and Supporting Industry QIP are entitled to customs duty, special tax and value-added tax exemption for the import of Construction Material, Construction Equipment, Production Equipment and Production Inputs. Domestically Oriented QIP is entitled to customs duty, special tax and value added tax exemption for the import of Construction Material, Construction Equipment, and Production Equipment. The Law on Financial Management and/or the Sub-Decree shall determine the incentives for Production Inputs.

Source: http://www.cambodiainvestment.gov.kh/wp-content/uploads/2021/12/LOI_English-Updated-13Dec21.pdf

Source: RHT Legal Update