Capital Gains Tax in Cambodia: What Foreign Investors Must Know

Cambodia’s Capital Gains Tax (CGT) was first announced in 2020 and has been deferred multiple times since then. But as of 2025 and into 2026, the regime is now implemented, though not all at once.  At a flat rate of 20% on net gains, CGT applies to a wide range of assets important to any foreign investor. This includes shares in Cambodian companies, leases, intellectual property, goodwill, and foreign currency, which are already in scope.

In this article, we will cover what you need to know about Capital Gains Tax in Cambodia as a foreign investor. We will talk about current regulations, how gains are calculated, what exemptions apply, and 2027 updates. 

Understanding Capital Gains Tax in Cambodia

What is a Capital Gains Tax?

A capital gain is the profit you make when you sell or transfer an asset for more than you paid for it. Capital Gains Tax is the tax levied on that profit. In Cambodia, CGT is a flat 20% on the capital gain from the sale or transfer of capital assets. We will go in-depth on how CGT is calculated below. 

CGT is separate from income tax or corporate tax on business profits. It targets gains specifically arising from the disposal of assets instead of your business revenue. This  distinction matters because the two taxes are calculated differently, apply at different points, and carry different compliance obligations.

For foreign investors, CGT is particularly important for a few reasons:

1. Directly affects your exit returns. Whether you are selling shares as part of an M&A transaction, exiting a real estate investment, or transferring a lease at a profit, CGT reduces your net proceeds. Factoring it into your investment model from the start gives you a more accurate picture of actual returns.
2. Changes how you structure transactions. A share sale and an asset sale produce different CGT outcomes. Holding structures, treaty jurisdictions, and the timing of a disposal all affect how much tax is owed. What worked before CGT was in place may no longer be the most tax-efficient approach.
3. Non-compliance carries serious consequences. In Cambodia specifically, a transfer of assets without a CGT Compliance Certificate is legally invalid. It means ownership of the asset does not change hands in the eyes of the law until the tax obligation is settled.

Who Is Subject to CGT?

Cambodia’s CGT applies based on your residency status and asset location.

Resident taxpayers (physical persons) are taxed on capital gains from both Cambodian and foreign-located assets. You are considered a Cambodian tax resident if you meet the following criteria:

1. Have a residence in Cambodia
2. Have established their principal place of abode here
3. Have spent more than 182 days in Cambodia within any 12-month period.

Non-resident taxpayers (whether individuals or companies), on the other hand, are taxed only on gains from assets within the country. This includes gains from the sale of Cambodian property and the transfer of shares in Cambodian companies, both of which are treated as Cambodian-source income.

Foreign-owned companies incorporated abroad are generally treated as non-resident taxpayers. This applies if you are structured and managed from abroad, or have their principal place of business outside Cambodia. For these entities, CGT applies to Cambodian-sourced capital gains.

Current Capital Gains Tax Regulations in Cambodia

The CGT regime was formally enacted through Prakas No. 496 MEF.PRK, issued by the Ministry of Economy and Finance on 18 July 2025. It introduced a comprehensive framework covering six categories of capital assets. The rollout is phased, and the timeline matters depending on what you own. 

It was scheduled to start from September 2025 and was postponed to 1st January 2026. However, the Cambodian government announced a further deferral in January 2026. CGT on immovable property has now been postponed again to 1 January 2027.

Effective 1 January 2026, CGT applies to gains from:

• Leases and subleases
• Investment assets (shares, bonds, securities, and other financial assets)
• Goodwill (intangible value including brand equity, customer lists, and operational synergies)
• Intellectual property (patents, copyrights, trademarks, and industrial designs)
• Foreign currency (any currency other than the Cambodian Riel)

This creates a two-track system:

1. If you are dealing with shares, goodwill, IP, or leases, CGT is already in force. 
2. If you are dealing with land and buildings, you have a reprieve until 2027.

How is CGT Calculated?

The CGT rate is a flat 20% on the net capital gain, where net capital gain is equal to the selling price minus allowable deductions. There are two ways you can calculate CGT in Cambodia:

Details	Actual Expenses Deduction Method	Determination-based Method
Suitable for	All capital assets	Immovable property only
Formula	Capital Gains = Sale Price − (Acquisition Cost + Actual Expenses) CGT = Capital Gain x 20%	Capital Gain = Sale Price − 80% × Sale Price = 20% × Sale Price  CGT = Capital Gain × 20 % = 20 % × 20 % × Sale Price = 4 % × Sale Price*

*CGT under Determination-based method is effectively 4% of the sale price for immovable property instead of 20%

Actual Expense Deduction Method

The actual expense deduction method is the standard way to calculate taxable capital gain under Cambodia’s capital gains tax (CGT) regime. It lets you deduct all documented, real expenses you incurred in acquiring, holding, improving, and transferring the asset.

For example, you sold a house for  $150,000 (sale price). This house was originally bought for $100,000 (acquisition cost). Besides the sale price, you also paid: 

• Transfer tax: $4,000
• Selling commission: $6,000
• Renovation cost: $5,000

This means your actual expenses in total for this property is $115,000 (total of all expenses). To calculate Capital Gains, you need to deduct the sale price with total expenses. This means your total Capital Gains for this sale is $35,000. Using the standard 20% formula, your CGT in total is $7,000. 

Keep in mind, unrealized gains are not taxable. If you hold an asset whose value has increased on paper but you have not yet sold or transferred it, CGT does not apply. The tax is triggered only when there is an actual sale or transfer.

Determination-based Method

The determination-based method (also called the determination-based expense deduction method) is Cambodia’s simplified way to calculate capital gains tax (CGT). 

Instead of listing and proving actual costs (like renovation, taxes, fees), you assume that 80% of the sale price is deductible expenses. This method of calculation is only allowed for immovable property (land, buildings, real estate) and cannot be used for:

• Shares
• Leases (unless tied to immovable property)
• Intellectual property
• Business goodwill
• Foreign currency

For example, you sell a property for $300,000 but you don’t have documentation on all your actual expenses for the property. Using a Determination-based method, your allowable expenses are $240,000 (80% x sale price). This means your capital gains is $60,000 ($300,000 – $240,000). In total, your capital gains for selling your property is $12,000 (20% x Capital Gains). 

Assets Subject to Capital Gains Tax

1. Immovable Property (Deferred to 1 January 2027)

This covers land, buildings, houses, and other constructions. Gains from sales or transfers of these assets will be subject to 20% CGT, but only from 2027 onwards.

When the immovable property rules take effect, taxpayers will have two options for calculating their taxable gain:

1. Standard deduction method: 80% of the sale proceeds is treated as a deductible expense, meaning only 20% of the gross sale price becomes the taxable base. This is the simpler option and works well when acquisition costs are low or poorly documented.
2. Actual cost method: You deduct all verified expenses tied to the asset. This includes the original purchase price, renovation or improvement costs, property taxes paid during ownership, maintenance expenditures, and financing costs directly related to the property. This method requires thorough documentation but may produce a lower tax liability for assets where acquisition and holding costs were significant.

2. Leases and Subleases (In Force Since January 2026)

Gains from the assignment or transfer of lease rights fall under the CGT regime. This is particularly relevant for investors holding long-term land leases in Cambodia. This is a common structure used by foreign investors who are restricted from owning freehold land. If you are transferring lease rights, CGT applies now.

For leaseholders, you must ensure your lease documents and original acquisition costs are in order.

3. Investment Assets in Shares (In Force Since January 2026)

This is the most significant category for foreign corporate investors. The sale or transfer of shares in a Cambodian company is subject to CGT. This covers shares, bonds, securities, and other financial instruments. The deferral of immovable property CGT did not extend to shares effective from January 2026.

For share transfers, the taxable gain is realized at the earliest of three events:

• Recognition of the share transfer by the Ministry of Commerce (MoC)
• The seller losing control or management rights over the shares
• Receipt of full payment for the shares

Crucially, the Cambodian company whose shares are being transferred is responsible for withholding, declaring, and paying the CGT on behalf of the seller. This means that if you are selling shares in a Cambodian company, the company itself becomes the compliance actor, not just you as the seller.

Under current regulations (Prakas No. 1130), the taxable gain is calculated by taking the selling price and deducting both your allowable actual costs and the company’s accumulated Retained Earnings (RE). Allowable costs include the original share subscription price and direct transaction fees (legal, valuation, and sales commissions).

Deducting the Retained Earnings prevents your capital gains base from being artificially inflated. However, keep in mind that the RE portion you deduct is not tax-free. It is carved out of the CGT calculation because it triggers a separate 14% Deemed Dividend Withholding Tax instead. The standard 80% lump-sum deduction is strictly unavailable for share deals. 

For listed securities traded on the Cambodia Securities Exchange, the payment agent handles withholding and declaration.

4. Goodwill (In Force Since January 2026)

Goodwill refers to the intangible premium paid above the fair market value of a company’s identifiable assets. This includes brand value, customer relationships, and operational synergies. If a transaction involves a transfer of goodwill (e.g. a business sale or acquisition) the gain is taxable.

5. Intellectual Property (In Force Since January 2026)

This covers patents, copyrights, trademarks, commercial logos, useful models, and industrial designs used for commercial purposes. If you are transferring IP rights in Cambodia, the gain from that transfer is subject to CGT.

6. Foreign Currency (In Force Since January 2026)

Gains from foreign currency transactions are included in the scope. This applies to foreign exchange trading and other financial asset transactions conducted through entities licensed by the Securities and Exchange Regulator of Cambodia (SERC), where the payment agent handles withholding.

CGT Exemptions in Cambodia

The exemptions under Prakas 496 are narrow and specific. Here is what qualifies for an exemption from CGT:

• Agricultural land: Gains from the sale of agricultural land are exempt, provided the seller is a tax-resident farmer who has been actively cultivating the land. You will need a confirmation letter from a local authority or the GDT to verify the agricultural use.
• Primary residence: If you sell your principal residence and you have owned and occupied it for at least five years prior to the sale, the gain is exempt from CGT. Where a taxpayer (or their spouse) owns more than one residence, only one property can qualify as the primary residence. This is a meaningful exemption for long-term individual residents.
• Family transfers: Transfers of immovable property through inheritance among close biological relatives (parents, children, siblings) are exempt. This also applies to first-time gifts of immovable property within the same family circle. Note that this exemption applies specifically to immovable property.
• State and diplomatic entities: Property owned by the government, state institutions, foreign diplomatic or consular missions, and international organizations is outside the scope of CGT.
• Public interest: Property used for public interest, such as infrastructure projects or humanitarian purposes, is exempt.
• New share issuances: The issuance of new shares to increase a company’s registered capital or inject new investment is not treated as a sale or transfer of shares. This means routine capital increases will not trigger CGT, which is good news for companies going through funding rounds or capital restructuring.
• Double Tax Agreement (DTA) relief: Cambodia has DTAs with several countries, including Singapore, Thailand, China, and others. If you are a resident of a DTA partner country, you can apply the provisions in the treaty related to capital gains. In practice, treaty benefits require a formal application with supporting documentation. This is an important planning consideration for foreign investors holding assets through treaty-jurisdiction structures.
• Withholding tax interaction: Share transfers subject to the 20% CGT are fully exempt from the standard 14% Cambodian-sourced income withholding tax. However, under Prakas 1130, any accumulated retained earnings deducted from the sale price are treated as a deemed dividend distribution and remain subject to the 14% dividend withholding tax.

Compliance and Registration Requirements

You must file a CGT declaration and pay the tax within three months from the date the capital gain is realized. This can be a tight window, especially when it comes to complex transactions with cross-border parties. 

For capital assets other than shares located in Phnom Penh, declarations and payments go directly to the GDT. For assets located in the provinces, you can file at the relevant provincial tax branch or at the GDT in Phnom Penh upon request.

For share transfers, the Cambodian company whose shares are being sold is responsible for withholding and remitting the CGT to the GDT.

Documentation Requirements

The GDT has the authority to reassess your taxable base, so documentation is your first line of defence. For every transaction, you should maintain:

• A properly executed Sale and Purchase Agreement (SPA) with a clear statement of the sale price
• Acquisition documents showing the original purchase price
• Records of improvement costs (invoices, contracts, receipts)
• Records of transaction expenses (legal fees, brokerage fees, valuation reports)
• Evidence of any applicable exemptions (for example, a local authority letter confirming agricultural use)

For share transactions, this documentation burden falls on the Cambodian company acting as the withholding agent. The company needs to know the seller’s acquisition cost and allowable deductions to calculate the correct taxable gain. This can be challenging when the seller is a foreign entity that has held shares since formation.

CGT Compliance Certificate

After paying the tax,  a CGT Compliance Certificate is issued by the GDT. This certificate is mandatory for validating the transfer of ownership. Any transfer of capital without this certification is legally invalid under Article 15 of Prakas 496. 

For buyers, this means you need to ensure the seller has fulfilled their CGT obligations before the transaction closes. Otherwise, you risk holding an asset with a legally defective title.

In practice, this certificate requirement should be built into your transaction timeline and SPA conditions.

Need Help Navigating CGT in Cambodia?

Cambodia’s CGT regime is still relatively new, and the compliance requirements leave little room for error. To help you manage CGT, Emerhub’s tax and accounting team can help you calculate your CGT liability and prepare declarations on your behalf. With our experience in managing tax compliance in the country, our team can provide you with valuable advice on how to structure your business to mitigate tax liabilities.

If you have an upcoming transaction or want to review how CGT affects your current holdings, get in touch with our team for a consultation.