On 18 July 2025, the Ministry of Economy and Finance (“MEF”) issued Prakas 496 MEF.PRK on Capital Gains Tax (“CGT”). This marks a significant expansion of the tax net-gains from property, shares, and financial assets are now squarely within the tax authority’s reach from their respective effective dates.
I. Scope and tax rate
- The CGT applies to resident individuals who earn capital gains from assets both within Cambodia and abroad, as well as to non-resident taxpayers earning capital gains from Cambodian assets.
- The CGT imposes a flat 20% tax rate and includes specific rules on exemptions, deductions, and filing procedures.
II. Definition of capital
There are six asset categories subject to CGT:
- Real estate – land, houses, buildings, and constructions.
- Leases – transactions granting use of immovable property for a fee.
- Investment assets – stocks, bonds, securities, and other financial instruments.
- Business reputation – intangible assets such as licenses, customer lists, and brands.
- Trademarks – patents, copyrights, industrial designs, and related commercial rights.
- Foreign currency – currencies other than the Cambodian riel.
III. Exemption
CGT exemptions include:
- Agricultural land used by citizens for production (with proper permits).
- Principal residence held for at least 5 years.
- Transfers within the family circle via succession or first donation.
- Property owned by government institutions or used for public benefit.
- Issuance of new shares for capital increase or new investments.
- Non-resident shareholders are exempt from withholding tax on dividends linked to capital gains.
IV. Deductible methods
- Real estate: taxpayers may choose between
- Fixed deduction method: 80% of sale price, or
- Actual expenses method: actual expenses incurred (must be supported by documents).
- Other capital types: only the actual expenses is allowed. Excess expenses cannot be refunded or offset against gains from other capital assets.
V. Documentation requirements
Required documents include:
- Identity proof;
- Family/residence book;
- Property contracts;
- Payment invoices ; and
- Other documents verifying the sale or transfer.
VI. Calculation of taxable gains
- Real estate & other assets: Selling price minus allowable expenses. The tax administration may re-determine the sale price if the declared value is lower than the market value.
- Shares: Sale or transfer price minus expenses related to share acquisition and sale. Market value may apply when no formal contract exists.
VII. Filing and payment
- Tax returns must be filed and tax paid within 3 months of realizing capital gains.
- Filing locations depend on asset type and location:
- Real estate: General Department of Taxation (Phnom Penh) or provincial tax branches.
- Shares: Enterprises must withhold and remit CGT.
- Securities and financial assets: Paying agents must withhold and remit CGT.
VIII. Overseas property
Cambodian resident taxpayers paying CGT on foreign assets can offset foreign tax paid. Additional tax is due if foreign tax is less than the Cambodian CGT.
IX. Implementation timeline
- Leases, investment properties, business reputation, trademarks, and foreign currency: CGT effective from 1 September 2025.
- Real estate: CGT effective from 1 January 2026.
- Shares: CGT applied under separate regulations.
X. Compliance obligations
- Taxpayers must self-declare and comply with CGT regulations.
- Residents in countries with double taxation agreements must follow rules relating to CGT under these agreements.
- Transfers of capital are not legally valid until CGT obligations are met.
This Prakas represents a significant step toward formalizing Cambodia’s capital gains taxation system. Taxpayers engaging in property transactions, share sales, or other capital transfers must carefully review their compliance obligations to avoid penalties.
For more details and assistance in reviewing your tax obligations under this Prakas, please contact us.
