As a foreign employer in Cambodia, you are legally responsible for calculating, withholding, and remitting salary tax on behalf of your employees every month. Cambodia runs on a pay-as-you-earn (PAYE) system, which settles tax at the source, and your employees receive net pay.
You must also maintain accurate payroll records and issue payslips that clearly show tax withheld, social security contributions, and any additional benefits. The General Department of Taxation (GDT) audits employers, and poor record-keeping creates direct financial exposure. Missing a filing deadline or incorrect calculations carries heavy penalties, including 10% to 40% plus 1.5% monthly interest on the outstanding balance.
This guide helps you understand your obligations as an employer when calculating and withholding tax for your employees. We will talk about residency rules, tax brackets, fringe benefits, NSSF contributions, and your monthly compliance obligations as an employer.
Understanding Cambodia's Tax on Salary (ToS)
Cambodia does not have a traditional personal income tax. Instead, it imposes a Tax on Salary (ToS). It is a monthly tax on employment income administered by the General Department of Taxation (GDT). It applies to all employees working in Cambodia, both local and foreign.
What Qualifies as Taxable Salary
Taxable employment income includes basic salary, bonuses, incentive payments, overtime pay, and cash allowances such as transport or meal allowances paid directly to the employee. Non-cash benefits (e.g. housing or a company car) are taxed separately under the Fringe Benefits Tax (see below).
Tax vs Non-tax Residents Rules in Cambodia
Every employee falls into one of two categories, and the category determines their tax rate.
- Tax Residents are individuals present in Cambodia for more than 182 days in any 12-month period. You also qualify as a tax resident if you are domiciled in Cambodia or have your principal place of abode in the country. Residents are taxed on their worldwide salary income using progressive rates from 0% to 20%.
- Non-Residents are those present for 182 days or fewer. Non-residents pay a flat 20% on Cambodia-sourced salary only, with no access to progressive brackets or personal deductions.
Important: You must track your foreign employee’s days in Cambodia. If they start as a non-resident and cross the 182-day threshold mid-contract, you must switch their withholding to the progressive resident rates from that point forward.
Double Taxation Relief for Expats from Treaty Countries
Cambodia has Double Taxation Agreements (DTAs) with 11 jurisdictions, including Singapore, China, Brunei, Thailand, Vietnam, Indonesia, Hong Kong, Malaysia, South Korea, and Macau. If an expat employee is a national of a DTA country, their Cambodian tax liability is reduced or offset against taxes paid in their home country.
Resident employees can claim a foreign tax credit, capped at the lower of the foreign tax paid or the Cambodian ToS on that income. Both you and your foreign employee must submit supporting documentation to the GDT to claim the credit.
Emerhub can help verify applicable treaties by liaising with the GDT on your behalf.
Factors to Consider When Calculating ToS
Progressive Tax Brackets for Resident Employees
Cambodia's resident salary tax brackets are set under Sub-Decree No. 196, effective January 1, 2023. Rates apply incrementally, where each bracket only covers the portion of income that falls within it, not the full salary.
| Monthly Taxable Income (KHR) | Approximate USD | Tax Rate |
|---|---|---|
| 0 – 1,500,000 | $0 – ~$370 | 0% |
| 1,500,001 – 2,000,000 | ~$370 – ~$495 | 5% |
| 2,000,001 – 8,500,000 | ~$495 – ~$2,100 | 10% |
| 8,500,001 – 12,500,000 | ~$2,100 – ~$3,090 | 15% |
| Above 12,500,000 | Above ~$3,090 | 20% |
For example, an employee earning KHR 10,000,000 per month pays 0% on the first KHR 1.5 million, 5% on the next KHR 500,000, 10% on the portion from KHR 2 million to KHR 8.5 million, and 15% on the remainder and not 15% on the entire amount. For non-resident employees, a 20% flat rate is applied without brackets or deductions.
Allowable Deductions for Resident Employees with Families
Cambodia’s tax system grants a small set of standard family‑related deductions and exempts certain employment‑related allowances from taxable salary. Before calculating salary tax for employees, you need to deduct the following:
- Dependent child: KHR 150,000 per month, per child under 14. The deduction continues if the child is between 14 and 25 and enrolled full-time at a recognized institution.
- Non-working spouse: KHR 150,000 per month for a dependent spouse who is not earning income.
- NSSF pension contribution: The employee's 2% monthly pension contribution to the NSSF is deductible from taxable salary.
Note: Non-resident employees are not entitled to any deductions.
How Fringe Benefits Are Taxed Separately
Non-cash benefits are subject to Fringe Benefits Tax (FBT) at a flat 20% of the benefit’s fair market value. Taxable fringe benefits include company housing, personal use of a company vehicle, private health or life insurance not provided to all staff, subsidized loans, and entertainment allowances.
This is a separate obligation from the ToS, and it applies whether the employee is a resident or non-resident. You must declare and pay FBT monthly alongside your regular ToS filing.
However, some benefits are exempt such as mandatory NSSF employer contributions, and health or life insurance premiums provided uniformly across all employees.
Tip: Factor FBT when structuring compensation packages for senior staff or expats. You can gross up (covering the FBT) as part of your compensation package).
How to Calculate Salary Tax in Cambodia
As an example, a resident employee earning KHR 6,000,000 per month (~USD 1,480) with one dependent child under 14 would have a ToS breakdown:
- Start with a KHR 6,000,000 base salary
- Subtract allowable deductions to calculate the taxable income.
- NSSF Pension Contribution (2%): KHR 120,000
- Dependent Child Allowance: KHR 150,000
- Taxable Income: KHR 5,730,000
- NSSF Pension Contribution (2%): KHR 120,000
- Dependent Child Allowance: KHR 150,000
- Taxable Income: KHR 5,730,000
- With KHR 5,730,000 taxable income, apply the progressive tax calculation:
- 0% on KHR 1,500,000 = KHR 0
- 5% on KHR 500,000 = KHR 25,000
- 10% on KHR 3,730,000 = KHR 373,000
- Total Monthly ToS to Withhold: (KHR 25,000 + KHR 373,000) KHR 398,000 (~USD 98)
- 0% on KHR 1,500,000 = KHR 0
- 5% on KHR 500,000 = KHR 25,000
- 10% on KHR 3,730,000 = KHR 373,000
- Total Monthly ToS to Withhold: (KHR 25,000 + KHR 373,000) KHR 398,000 (~USD 98)
You must deduct this from the employee's salary and remit to the GDT by the 20th (for paper filing) or the 25th (for e-filing) of the following month.
Other compliance deadlines: Remit NSSF contributions by the 15th of the following month to the NSSF, separately from the GDT.File an annual ToS declaration by March 31 of the following year, summarizing total salaries paid and all taxes withheld.
Keep in mind that you have to do this calculation for each of your employees and adhere to the payment schedule set by the DGT. This is crucial for large or remote teams operating in Cambodia.
To help mitigate risks, Emerhub’s tax and compliance service can help you calculate salary tax for your employees, NSSF contributions, and annual tax filing.
Contact our local experts for a free consultation on ToS calculation for your employees.
Frequently asked questions
Do I need to withhold salary tax even if my company is not registered in Cambodia?
Employer tax obligations apply regardless of whether your company is formally incorporated in Cambodia. If your employees are working in the country, you must register with the GDT and NSSF and fulfill all withholding requirements. An Employer of Record (EOR) can manage this on your behalf without requiring a local entity.
What is the difference between Cambodia's Tax on Salary and personal income tax?
Cambodia does not have a personal income tax. The Tax on Salary (ToS) is its functional equivalent: a monthly employment tax withheld and remitted by the employer. Employees with only employment income do not file personal tax returns.
How do I determine whether a foreign employee is a resident or non-resident?
Anyone present in Cambodia for more than 182 days in a 12-month period is a tax resident. The days do not need to be consecutive. If an expat crosses the 182-day threshold mid-contract, switch their withholding from the flat 20% non-resident rate to the progressive resident rates from that point forward.
Which salary allowances are exempt from the Tax on Salary?
Mandatory NSSF employer contributions and health or life insurance premiums provided uniformly to all employees are exempt. Most cash allowances paid directly to employees (e.g. transport, meals, and similar) are taxable as salary. Verify any exemption claim against GDT guidelines or consult a local tax advisor before applying it.
How is a company car or housing benefit taxed?
Non-cash benefits like housing, personal use of a company vehicle, or subsidized loans are subject to the Fringe Benefits Tax (FBT) at a flat 20% of the benefit's fair market value. FBT is declared and paid monthly alongside your regular ToS filing.
Can I pay employee salaries in US dollars?
Cambodia's economy operates in both USD and Khmer Riel (KHR). For ToS calculations, USD salary amounts are converted to KHR using the National Bank of Cambodia (NBC) official annual exchange rate in Riel. Use the NBC-published rate for the relevant tax year when processing payroll in foreign currency.