Tax Obligations for Members of the Board of Directors and Company Directors in Cambodia
On June 20, 2025, the General Department of Taxation (“GDT”) has released a new instruction No. 19116 GDT the tax obligations for members of the Board of Directors and Company Directors working in Cambodia. The guidance clarifies how individuals in such roles are taxed based on their employment status and the nature of their engagement. The key points are summarized below.
1) Tax on salary obligations for Board Members or company directors
The members of the Board of Directors or company directors working in a company in Cambodia, including those temporarily seconded by a parent company or overseas head office, are subject to tax on salary if they meet at least two of following conditions
- No risk of not receiving payment
- Cannot set own working time and place
- Do not spend capital to purchase equipment for performing work
- Work exclusive for one company
Important Note: Tax on salary applies regardless of where the salary is paid, whether inside or outside Cambodia and regardless of whether the individual has a work permit.
2) Withholding Tax Obligations for Board Members or company directors
If a director or board member does not meet the conditions of an employee, and instead performs services independently, whether as residents or non-residents, the following applies:
- The individual is considered to be providing services to a Cambodian company.
- The payment for such services is not subject to tax on salary, but instead to withholding tax:
· 14% for non-residents
· 15% for residents
3) Exemption from tax on salary
Board Members or company directors are exempt from tax on salary if the following conditions are met:
- Are only named in Articles of Incorporation and Patent certificates without active management role
- Only attend occasional board or shareholder meetings
- Do not receive salary from the Company in Cambodia
Compliance Reminder
Enterprises should assess the tax treatment of their board members and directors to ensure correct tax classification and application of withholding tax. Misclassification may result in non-compliance penalties.
For assistance in reviewing your tax obligations under this instruction, please contact us.
