To attract investment, Cambodia offers substantial incentives to businesses registered as Qualified Investment Projects (QIPs). These incentives aim to reduce business costs, encourage innovation, and promote sustainable practices.

Option 1: Tax on Income Exemption

Under this incentive scheme, businesses can benefit from a phased income tax exemption based on their investment category:

• Group 1: 9 years of tax exemption.
• Group 2: 6 years of tax exemption.
• Group 3: 3 years of tax exemption.

Following the exemption period, a progressive tax rate is applied, starting at 25% for the first two years, 50% for the next two years, and 75% for the subsequent two years. Businesses also enjoy exemptions from minimum tax and prepayment of income tax, provided they submit an independent audit report.

Export QIPs are exempt from export taxes unless specified otherwise in relevant regulations.

Option 2: Special Depreciation and Expense Deduction

This option offers businesses special depreciation rates for capital expenditures and allows the deduction of up to 200% of specific expenses, including:

• Training Cambodian employees to reduce reliance on foreign workers.
• Implementing IT systems for accounting.
• Providing scholarships for Cambodian employees.
• R&D and innovation projects, particularly in advanced technologies such as AI and robotics.

This option also provides tax exemptions for imported production equipment and inputs used in the manufacturing process.

Additional Incentives for QIPs

Beyond the core incentives, QIPs importing construction materials, production equipment, and production inputs qualify for exemptions from customs duty, special tax, and value-added tax (VAT).

Investments that contribute to employee welfare, such as accommodation, childcare facilities, canteens, and first-aid rooms, also benefit from tax exemptions, reflecting Cambodia’s commitment to corporate social responsibility.

Expanded Qualified Investment Projects (EQIPs)

Businesses expanding their existing operations, whether by adding new product lines or upgrading technology, can qualify for additional incentives. The extended income tax exemption periods include:

• 9 years for Group 1 activities.
• 6 years for Group 2 activities.
• 3 years for Group 3 activities.

Special Incentives for Strategic Sectors

Sectors critical to Cambodia’s long-term development, such as high-tech industries, green energy, and industries with significant employment or export potential, may receive additional incentives under the Law on Financial Management.

Why Invest in Cambodia?

Cambodia’s investment framework offers a structured approach to business growth, with tax exemptions, duty-free imports, and significant expense deductions. The government’s focus on fostering innovation, supporting SMEs, and encouraging sustainable practices makes the country a prime choice for investors seeking long-term growth opportunities in Southeast Asia.