For some investors, the need to establish a subsidiary or branch of their offshore company, while foreseeable in the longer term, may not immediately be necessary. A more appropriate form may be that of a representative office. Representative offices are primarily used for the sourcing local goods and services and gathering local information for the parent company. They also serve as a vehicle for promoting and marketing the offshore parent’s products and services in Cambodia. They are thus best suited to assisting foreign investors wishing to gain entry to the Cambodian marketplace.
A representative office is not allowed to engage in active trading or provide services in Cambodia. It may not purchase, sell, or conduct any service or activity considered to be within the usual scope of the parent company’s business. It also may not engage in manufacturing, processing, or construction. Permitted activities include the right to employ local workers, and to market products and services at trade fairs. The representative office may negotiate commercial contracts on its parent company’s behalf, but the contract may only be entered into by the parent company.
The representative office is a non-taxable legal entity precisely because it is not permitted to engage in any sort of taxable activity. Doing so would expose the representative office to tax liability. The representative office, however, is required to withhold salary tax on salaries paid to employees and pay patent tax (an annual business operation tax). Representative offices cannot register for QIP status.
Source: https://www.dfdl.com/resources/publications/investment-guides/cambodia-2020/