Managing payroll in Cambodia requires a clear understanding of the distinction between Tax on Salary (ToS) and Tax on Fringe Benefits (ToFB). Whether you’re hiring local talent or onboarding international professionals, here’s your essential breakdown of Cambodia’s current tax landscape.
How to determine your tax residence
Your tax liability hinges on residency status. An individual is considered a tax resident if they maintain a principal place of abode in Cambodia or are present for more than 182 days within any 12-month period. Cambodia does not impose a formal personal income tax. Instead, residents pay Tax on Salary (ToS), which is withheld monthly by employers from employment income
- Residents: Taxed on worldwide (both Cambodian and foreign source) source of income
- Non-Residents: Taxed only on Cambodian-sourced salary
Tax on Salary (ToS) Rates
Cambodia applies different rate structures based on residency:
- Residents: The salary tax structure features progressive rates ranging from 0% to 20%. The monthly tax-free threshold is set at KHR 1,500,000 (approximately $375). Available deductions include a monthly rebate of KHR 150,000 per minor dependent child and per non-working spouse.
- Non-Residents: Flat rate of 20% (considered final tax)
Tax on Fringe Benefits (ToFB)
Any benefit, whether directly or indirectly advantageous to the employee, is subject to taxation, including:
- Housing allowances
- Private vehicle use
- Low-interest loans
- Educational assistance
Employers must withhold and remit this tax at flat rates of 20% of fair market value.
Key Exemptions to Know
Not all payments trigger taxation. Important exemptions include:
- Reimbursements for legitimate business expenses (travel/mission costs)
- Dismissal indemnity (within Labor Law limits)
- Seniority indemnity: Exempt up to KHR 4,000,000 (approximately $988)
Critical Compliance Deadlines
Employers must withhold and remit taxes to the General Department of Taxation (GDT) by: 25th of the following month (e-filing).Our team at BizMaker specializes in helping businesses navigate Cambodia’s regulatory landscape seamlessly. Let’s discuss how we can support your HR operations or Employer of Record (EOR) in Cambodia requirements.