** The following information have been compiled from various official and open sources including but not limited to the Ministry of Commerce (MOC), General Department of Taxation (GDT), Ministry of Labor and Vocational Training (MLVT), Ministry of Foreign Affairs and International Cooperation (MFAIC), Council for Development of Cambodia (CDC), among others. It is not meant to be exhaustive, but to provide foreign businesses and investors keen on establishing a presence, investment or partnership in Cambodia with an adequate understanding and appreciation of what it entails to set up a company.

Cambodia is an open economy with business-friendly regulations that welcome foreign businesses and investors keen on establishing a company, investment or partnership in the Kingdom. For example, it allows 100 percent foreign ownership of companies in most sectors; have legislative provision and safeguards for the protection of foreign investments from regulated prices and nationalization; has no foreign exchange restriction on the remittance of profits and no capital gains tax (yet). Although several international surveys do not rate Cambodia well in terms of the ease of doing business, foreign businesses that have been operating here may not share the same dire assessment. Similar to other emerging markets, one should keep an open mind and take the time to understand and appraise the local operating environment; there are often much simpler conduits and local practices that are in fact not as complicated or cumbersome as some have made them out to be. In this section, we provide some of the pertinent information that may be useful to foreign businesses setting up their companies in Cambodia.

Business Hours in Cambodia

In general, Monday to Friday: 8 am to 5 pm and Saturday: 8 am to 12 pm.

What are the Public Holidays in Cambodia?

Cambodia has 21 official public holidays (PHs) in a calendar year of which the most important or celebrated are the Khmer New Year in April and the Pchum Ben in September or October. Several PHs are based on the lunar calendar. An official list of PHs indicating their dates is announced by MLVT. Since September 2021, any PH that falls on a Sunday will not longer be carried over to Monday. 

Setting up a Business in Cambodia – Registration and Formation of a Company

On 15 June 2020, the Cambodian Government launched the single portal (https://www.registrationservices.gov.kh/), a new online business registration portal that allows a private limited company to be incorporated at the Ministry of Commerce (MOC), the General Department of Taxation (GDT) and the Ministry of Labor and Vocational Training (MLVT) in one streamlined process. Other relevant ministries/institutions whose involvement is required for specific license/permit may become involved at a later stage (if any).

In the case of the most common registration of a private limited company, the entire process takes around 8 working days from the date of submission of all required documents to obtaining the digital certificates from the following ministries:

•  MOC

  • Certificate of incorporation;
  • Business Extract; and
  • Articles of incorporation, with the ministerial seal.

•  GDT

  • Value Added Tax (VAT) certificate;
  • Patent Tax certificate;
  • Tax Registration Identification Card; and
  • Tax Instruction letter.

•  MLVT

  • Declaration of Opening of Enterprise.

With effect from 1 September, 2021, 4 other ministries/institutions including the Ministry of Tourism (MOT), the Ministry of Post and Telecommunications (MPTC), the Ministry of Industry Science Technology and Innovation (MISTI) and the Real Estate Business and Pawnshop Regulator of the Non-Bank Financial Services Authority (RPR of NBFSA) were included in the portal.

Requirements for naming a Company in Cambodia

Some of the requirements in registering the name of a private limited company are as follows:

  • Must include the words “Company Limited” or the appropriate abbreviation, “Co., LTD.” at the end.
  • Must not be similar to company names that have been previously registered.
  • Must not be contrary to public order (i.e. names that are offensive or a public nuisance).

Establishment of Business Entities in Cambodia

Cambodia’s Law on Commercial Enterprises (LCE) was promulgated in September 2005 to provide the legal framework for the establishment and operation of businesses in the Kingdom. It allows for the establishment of the following types of businesses.

  • Sole proprietorship
  • General Partnership (partners are personally liable for the partnership’s liability)
  • Limited Partnership (partners are liable only to the extent of their agreed contribution)
  • Limited Liability Company
    • Private Limited Company (may not have more than 30 shareholders; restrict share transfer; may not offer shares to the public)
    • Public Limited Company (may offer shares to the public)

One of the most common types of business entity registered by foreign investors/businesses is the Private Limited Company. Some of its requirements and characteristics include the following:

  • Can be 100% foreign owned
  • A minimum capital requirement of KHR 4 million (equivalent to USD 1,000) – i.e. minimum of 1,000 shares at KHR 4,[email protected]
  • Shareholder(s) liability limited to their value of capital contribution
  • Can have one or more directors (Note: Public Limited Company must have at least 5 but not more than 15 directors)
  • Corporate governance is simple and requires only one director
  • The dissolution process is relatively simple

There are broadly three types of legal entity / personality for foreign businesses that can be registered in Cambodia under the Law on Commercial Entities (LCE).

  • Representative Office in Cambodia. This is established primarily to facilitate sourcing of local goods/services, collect information and market intelligence (i.e. market research) and to promote and market the offshore parent company’s goods/services in Cambodia. It does not conduct commercial transactions per se, and can negotiate commercial contracts but only its parent company can enter into such agreements. not the most appropriate form for foreign investors, because it is usually created for the purposes of marketing, market research, and business networking. It is subject to withholding tax on salaries etc.
  • Branch Office in Cambodia. This is the same legal entity as the parent company and carries the same name of the latter, and is considered an extension of the parent company. It is created to conduct a professional service or particular commercial activity in Cambodia. It is legally liable for the losses and debts of the parent company.
  • Subsidiary Office in Cambodia. This is a separate legal entity from the parent company, the latter for which holds at least 51% of the capital / equity of the locally registered entity. It conducts commercial activities and are liable for local tax obligations. The major practical difference between a branch office and a subsidiary office is that the parent company is not jointly liable for the debts or losses of a subsidiary office.

Taxation in Cambodia

Foreign businesses are subject to local taxation such as the minimum tax and tax on profit, VAT and other applicable Withholding Tax. See section under Legal and Taxation for more information.

Employment and Contracts in Cambodia

Employment contracts in Cambodia are either Fixed Duration Contracts (FDC) or Undetermined Duration Contract (UDC).

A FDC must contain the following:

  • Contract duration – the date of commencement and expiry – with a renewal option so long as the total duration of the contract does not exceed the maximum duration of two years
  • Remuneration (Salaries and Benefits)
  • Working Hours
  • Job Description and Work conditions
  • Other Terms and Conditions

A written UDC must contain the following:

  • Contract duration – the date of commencement and expiry – with a renewal option so long as the total duration of the contract does not exceed the maximum duration of two years
  • Remuneration (Salaries and Benefits)
  • Working Hours
  • Job Description and Work conditions
  • Other Terms and Conditions

Rental, Recruitment and Office Fit-out in Cambodia

Use the Business Tools at no charge to estimate business set up costs, or shortlist service providers from the Business Directory to assist your business registration and set up, as well as the various operational and administrative compliances, including taxation.

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators / observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.