On 28 September 2022, the Cambodian government issued a new Sub-decree on the annual taxable income and monthly tax on salary (“Sub-decree 196”) to repeal the previous Sub-decree no. 09 dated 13 February 2020. This new Sub-Decree establishes a new taxable rate for an individual, sole proprietorship, and distributive share income to the non-legal entity as well as the monthly tax on the salary of resident employee. Surprisingly, there is a rise in the tax exemption rate for both annual taxable income and monthly tax on salary under the new law which is advantageous for the taxpayer. These new tax rates will be effective on 1 January 2023.
According to Sub-decree 196 any taxpayer (non-legal entity), who has an annual income starting from above 18 million riels, shall subject to the following tax rates:
| Tranche of annual taxable income | Rate |
|---|---|
| From 0 – 18,000,000 riels (Approx. 0 – USD 4,500) |
0% |
| From 18,000,001 – 24,000,000 riels (Approx. USD 4,500+ – USD 6,000) |
5% |
| From 24,000,001 – 102,000,000 riels (Approx. USD 6,000+ – USD 25,500) |
10% |
| From 102,000,001 – 150,000,000 riels (Approx. USD 25,500+ – USD 37,500) |
15% |
| Above 150,000,00 riels (Approx. above USD 37,500+) |
20% |
However, under the new Sub-Decree 196, monthly tax on salary is waived for those who receive the salary of 1.5 million riels per month compared to the former regulation where the threshold was at 1.3 million riels. Here are the new progressive rates of the monthly tax on salary:
| Tranche of monthly tax on salary | Rate |
|---|---|
| From 0 – 1,500,000 riels (Approx. 0 – USD 375) |
0% |
| From 1,500,001 – 2,000,000 riels (Approx. USD 375+ – USD 500) |
5% |
| From 2,000,001 – 8,500,000 riels (Approx. USD 500+ – USD 2,125) |
10% |
| From 8,500,001 – 12,500,000 riels (Approx. USD 2,125+ – USD 3,125) |
15% |
| Above 12,500,00 riels (Approx. above USD 3,125+) |
20% |
Mr. HOUN Vannak
Managing Partner
RHTLaw Cambodia
M +(855) 12 737 123
T +(855) 23 886 616
E vannak.houn@rhtlawcambodia.com
Ms. TAN Sambathmarina
Associate
RHTLaw Cambodia
M +(855) 89 780 452
T +(855) 23 886 616
E marina.tan@rhtlawcambodia.com