VAT in Cambodia: Guide for Foreign Business Owners

Value Added Tax or VAT is a type of consumption tax applied to goods and services in Cambodia. As a business owner, it is your obligation to collect and remit VAT to the local tax authorities. 

So, how does VAT affect how you do business in Cambodia? In this article, we will explain what goods or services are taxable, what qualifies for 0% or exemption, and how you can stay compliant across local and cross-border operations.

How does VAT work in Cambodia?

The Value Added Tax (VAT) in Cambodia is regulated by the General Department of Taxation (GDT) under the Ministry of Economy and Finance. The country operates a self-declaration regime, which implies that it is your obligation as a business owner to calculate, report, and pay your own taxes.

At its core, VAT works by balancing what you collect on sales (output VAT) against what you pay on purchases (input VAT). If your output VAT is higher, you can pay the difference to the government. However, if input VAT is higher, you can either request a refund or carry the balance forward.

Cambodia’s VAT system is structured into three main categories. Below is a quick overview, with a full breakdown in the next sections.

From a business perspective, how VAT affects you also depends on your customer base: 

• In B2B sales, you typically add 10% VAT, but your VAT-registered customer can reclaim it. This keeps your supply chain tax-neutral, preventing double taxation throughout. 
• In B2C sales, you still add 10% VAT, but end consumers cannot reclaim it and VAT becomes part of the final price they pay.

This framework sets the stage for understanding which goods or services are taxable, what qualifies for 0% or exemption, and how to stay compliant which we’ll break down in the following sections.

Do You Need to Register for VAT in Cambodia?

You’ll have to register for VAT if your business meets any of the criteria set by the General Department of Taxation (GDT). These include certain thresholds or conducting specific activities as below: 

• Turnover thresholds: 
  • Goods: KHR 125 million (~USD 30,500) within three consecutive months.
  • Services: KHR 60 million (~USD 14,600) within three consecutive months.
• Goods: KHR 125 million (~USD 30,500) within three consecutive months.
• Services: KHR 60 million (~USD 14,600) within three consecutive months.
• Nature of activities:
  • Importing or exporting goods.
  • Operating as a resident taxpayer (local entity or branch).
  • Holding government contracts worth more than KHR 30 million (~USD 7,300).
  • Supplying digital goods, services, or e-commerce to Cambodian customers above KHR 250 million (~USD 61,000) annually or KHR 60 million (~USD 14,600) quarterly.
• Importing or exporting goods.
• Operating as a resident taxpayer (local entity or branch).
• Holding government contracts worth more than KHR 30 million (~USD 7,300).
• Supplying digital goods, services, or e-commerce to Cambodian customers above KHR 250 million (~USD 61,000) annually or KHR 60 million (~USD 14,600) quarterly.

While it’s common to wait until you hit the thresholds, waiting too long means you cannot reclaim import VAT and may face setbacks with permits or contracts that require a VAT certificate (e.g. construction permits, tourism or F&B licenses, government contracts). Emerhub’s in-country tax consultants can handle early registration with the GDT to keep your processes smooth from start to finish. 

How VAT Applies to Your Business in Cambodia

When you enter the Cambodian market, one of the first steps is to determine which category your goods and services fall under: standard 10% VAT, zero-rated, or fully exempt. 

Apart from affecting your tax reporting, this also influences how you structure pricing, whether you can reclaim costs, and how smoothly you’ll trade across borders.

a. Standard VAT Rate (10%)

The standard 10% VAT applies to any business supplying goods or services within Cambodia, as outlined under the Law on Taxation (2023). This covers all sectors and company sizes, unless your activities fall into the zero-rated or exempt categories.

For instance, if you run a restaurant, every sale to walk-in customers is subject to 10% VAT. For your B2C diners, that tax becomes part of their final bill.

For B2B transactions, however, the mechanism works differently: you still add VAT on your invoice, but your VAT-registered client can reclaim it as input VAT. This ensures the tax doesn’t snowball as products and services move through suppliers, distributors, and retailers. Ultimately, it’s only the end consumer who bears the cost.

b. Zero-Rated Supplies (0%)

Zero-rated supplies are transactions taxed at 0% VAT. In practice, you don’t add VAT to the sale, but if you’re VAT-registered, you can still reclaim the VAT you’ve already paid on related expenses. Zero-rating rules are clarified under Prakas No. 313 (MEF, 2024) to keep exports competitive while extending to specific activities such as:

• Exported goods: finished products that are sold and physically shipped out of Cambodia (e.g. garments, footwear, electronics, milled rice).
• Exported services:  services provided by Cambodian businesses to clients overseas, as long as the service is used outside Cambodia and not tied to local activities. (e.g. software development for a foreign company qualifies, but not tax or legal advice on doing business in Cambodia).
• Supplies to QIP manufacturers: goods and services provided directly to Qualified Investment Project (QIP) companies in key export industries such as textiles, garments, footwear, bags, and rice. This includes raw materials, packaging, or equipment maintenance.
• Agriculture and rice-related supplies: milled rice exports, paddy sold to exporters, rice milling services, and essential farming supplies such as fertilizers, seeds, animal feed, veterinary medicines, and agricultural equipment.
• International transportation: cross-border passenger services, airfreight, and sea freight related to exports.

⚠️ Important: To apply the 0% VAT rate and reclaim your VAT expenses, your business must be VAT-registered and able to prove eligibility. This requires export contracts, evidence of overseas use or QIP status, proof of foreign remittance, and compliant VAT invoices– all of which Emerhub experts can help you initiate and manage.

c. Exempted Sectors, Goods, and Services   

VAT-exempt supplies are not subject to VAT, and unlike zero-rated supplies, they don’t allow you to reclaim VAT on your costs. These categories are defined under Prakas No. 559 (MEF, 2017) and mainly cover essential services, such as:

• Healthcare: Medical and dental services provided by licensed practitioners or facilities.
• Education: Tuition and related services from approved schools, colleges, or training institutions.
• Finance: Interest, loans, and other financial services not considered fee-based.
• Utilities: Electricity, clean water supply.
• Postal services: Government-run postal operations.

What this means in practice: if you run a private clinic or an educational centre, you won’t charge VAT on your services, but you also cannot claim back the VAT you pay on rent, medical equipment, classroom materials, or third-party contractors. That VAT becomes part of your operating costs, which can add up quickly.

Emerhub’s tax experts help you plan around these constraints, ensuring your business structure remains efficient and compliant from day one.

Additional VAT Considerations: Exports, Imports, & Asset Disposal

VAT on Exports and Imports

Exports from Cambodia are generally zero-rated. This applies to both physical goods and qualifying export services, meaning you don’t add VAT to the invoice, but you can reclaim VAT on eligible costs linked to the export.

Imports, on the other hand, are charged 10% VAT at the point of entry, collected by the Customs and Excise Department. This VAT is recoverable if your company is VAT-registered and you maintain the required documents, such as the import declaration (Customs Form CAM-A01), VAT invoices, and proof of payment.

• Your business is VAT-registered, and
• You correctly report the transaction and maintain supporting documentation, including the import declaration (Customs Form CAM-A01), VAT invoice, and proof of payment.

Emerhub can handle both your VAT registration and import process, including acting as your Importer of Record (IOR) to ensure a clear customs trail and valid VAT claims from day one.

VAT on Assets Disposal

In Cambodia, disposing of business assets (whether through sale, transfer, donation, or write-off) is considered a taxable event. This is outlined in the Law on Taxation (2023) and clarified by GDT instructions on taxable supplies.

You must apply 10% VAT on the disposal value, even if the asset is fully depreciated or has already been used for years. The tax applies regardless of whether input VAT was claimed at purchase. Typical cases include:

• Selling used computers to another business
• Donating office furniture to an NGO
• Transferring machinery to a shareholder after winding down operations
• Liquidating assets as part of business closure or restructuring

⚠️ Even below-market transfers or shifting assets between branches can trigger VAT if not handled correctly. This is often overlooked during downsizing or exit, leading to penalties (see section below) or audit flags from the GDT.

Whether you’re importing machinery, exporting finished goods, or winding down operations, Emerhub can support your VAT compliance at every stage. We can step in as your Importer of Record (IOR), manage your VAT on exports and ensure your asset disposals are reported correctly.

Key Documents for VAT Registration in Cambodia 

To register for VAT, you must submit a complete and accurate set of documents to Cambodia’s General Department of Taxation (GDT). These prove your company’s legal status, local presence, and operational readiness to collect and remit VAT.

Our team can prepare all mandatory documents specific to your VAT treatment, which generally includes:

• Business Registration Certificate (BRC) from the Ministry of Commerce
• Tax Identification Number (TIN) applied for separately via the GDT portal
• Company stamp (must match company name in BRC)
• National ID or passport of the company director or tax representative
• Lease agreement for your business address in Cambodia (must match GDT submission)
• Local bank account details under the company name
• Photograph of your office frontage (clearly showing the business name and signage)

Once approved, the GDT will issue your VAT Certificate and VAT Registration Number, enabling you to issue tax invoices and start reclaiming input VAT.

How to Register Your Business for VAT in Cambodia

Once your business reaches the registration threshold, you must register for VAT with the General Department of Taxation (GDT). This can be done either:

• Online through the GDT’s E-Tax Services, or
• In person at your company’s assigned tax branch

To complete the registration, you’ll need to prepare and submit the required forms and supporting documents as mentioned above. These will need to be translated to Khmer and notarized, and the GDT may also request a site visit or additional clarification during the review process.

Emerhub’s compliance team can manage this process end-to-end– from preparing and translating your documents to liaising with the GDT and tracking your application until the VAT certificate is issued.

Once approved, we will provide you with your VAT registration number and certificate. This number must be included on all tax invoices and monthly VAT returns going forward.

Key Compliance Steps for VAT-Registered Businesses

Once your business is VAT-registered, your obligations begin immediately, even if you haven’t made your first sale. Cambodia’s GDT expects monthly filings, invoice compliance, and proper documentation from the outset. Emerhub’s tax compliance services can also support you in these requirements, including:

1. Monthly VAT filings by the 20th of each month, even during periods with no taxable activity.
2. Invoice reviews to ensure they meet all GDT requirements, including TINs, buyer/seller details, sequencing, and breakdowns.
3. Supporting documentation checks for input VAT claims, including customs forms, contracts, and payment slips.
4. Audit readiness through consistent recordkeeping and GDT-aligned processes for at least 10 years.

Bear in mind that Cambodia’s GDT imposes escalating penalties based on the severity of non-compliance:

• Minor lapses, such as late payments or underreporting below 10%, are classed as ordinary negligence and fined at 10%. 
• Larger discrepancies above 10%, or failing to respond within 15 days of a reminder, fall under serious negligence and trigger a 25% penalty.
• If you ignore GDT notices altogether, the GDT can impose a unilateral tax assessment of 40%, based on its own estimates. 

On top of these fines, every violation accrues 1.5% monthly interest until resolved. Emerhub helps you avoid these risks by keeping your filings, invoices, and claims aligned with GDT standards from the start.

Simplify Your VAT Compliance in Cambodia with Emerhub

Emerhub offers end-to-end support from company registration to VAT setup and ongoing compliance. Whether you’re launching in Cambodia or scaling cross-border operations, we help structure your operations for long-term growth and compliance. Our end-to-end services include:

• Full VAT registration for standard, zero-rated, and exempt supplies.
• Monthly VAT return filing and compliance support
• Import VAT recovery and customs clearance
• VAT structuring for exporters and QIP-linked transactions 

Need expert help navigating VAT in Cambodia? Reach out to our on-ground experts today– fill out the form below and we’ll put you in touch!