Tax on Salary

Overview

The tax on salary is a monthly tax imposed on salary that

has been received within the framework of fulfilling

employment activities

The tax on salary is the debt of the physical person

receiving the salary. This tax shall be collected

through withholding by the employer at the time of

salary payment.

A physical person resident in the Kingdom of Cambodia

is liable to the tax on salary for Cambodian source salary

and foreign source salary.

A non-resident physical person is liable to the tax on

salary for Cambodian source salary

A Cambodian resident taxpayer’s worldwide salary will be

subject to Cambodian Tax on Salary.

Who is liable to tax on salary ?- employees

- government officials

- private workers (BOD, officers, managers, technical

workers, sewing/cutting…)

- NGO workers (BOD, officers, managers, technical

guys, office workers, drivers…)

- employee of public companies

Who is exempted?

a) Salaries that officers and employees of a

diplomatic or consular mission of a foreign

government holding a diplomatic or official

passport of that government have received

within the framework of fulfilling their official

function in the Kingdom of Cambodia.

b) Salaries that foreign representatives, officials

and employees of international organizations

and of agencies of technical cooperation of

other governments have received within the

framework of fulfilling their official function in the

Kingdom of Cambodia.

Salary definition

The term “salary” means:

remunerations,

wages,

bonuses,

overtime,

compensations and

fringe benefits which are paid for the direct or

indirect advantage of the employee for the

fulfillment of employment activities

Not include as Salary

Certain redundancy payments.

Reimbursement of employment related expenses.

Certain uniform entitlements.

Certain traveling allowances.

The salaries of certain employees of approved

diplomatic, international and aid organizations.

The salaries of non-residents where the salary

cost is not deducted in Cambodia.

The salaries of members of the National

Assembly and Senate.

Not include as Salary (con’t) Real refunds on professional expenses made by the

employee under the assignment and for the benefit of the employer and which satisfy the 3 following conditions: made for the direct and exclusive interest of the enterprise; not exaggerated nor extravagant; supported by detailed invoices already paid and made in the

name of the recipient of the real expense refund.

Indemnity for the layoff within the limit as provided in Labor Law.

Additional remuneration with social characteristics where there is provision in Labor Law.

Supply gratis or below acquisition cost of special uniforms or professional equipment.

Flat allowance for mission and travel expenses. This allowance should not overlap the real expense refund provided in this article.

Fringe Benefits

Definition The (presumably private) use of motor vehicles.

The provision of accommodation support (including utilities and domestic helpers).

Low interest loans and discounted sales.

Educational assistance (unless employment related, say, for training).

Certain insurance support.

Excessive or unnecessary cash allowances, and social welfare and pension contributions.

Entertainment or recreational expenditure (which may additionally be non-deductible to the provider for Tax on Profit purposes).

Salary tax rate

Computing Salary Tax(Salary – Deduction) x Tax Rate = Salary Tax

10

0%

20%

10%

5%

15%

500,000

R

8,500,000

R

1,250,000R 15,000,000R12,500,000

R

1,250, 000

-500, 000

750,000 x 5%

= 35,500R

8,500,000

-1,250, 000

7, 250,000

x 10%

=

725,000R

12,500,000

-8,500,000

4,000,000

x 15 %

= 600,000R

15,000,000

-12,500,000

2,500,000

x 20%

= 500,000R

Deductions

11

75,000 R deduction allowance for each of the

following case:

Child 0r Kids (14 years = yes, 25 years = yes if still

study

spouse yes if stay at home

Salary tax calculation

If taxable salary is in:

5% bracket

10% bracket

15% bracket

greater than 12,500,000 R

(Taxable Salary*0.05) – 25,000

R

(Taxable Salary*0.10) – 87,500

R

(Taxable Salary*0.15) –

512,500 R

(Salary*0.20) – 1,137,000 R

Administration

As the Tax on Salary rate scales are stated in

Cambodia Riel, earnings in foreign currency have

to be translated into Riel.

Official exchange rates are provided for this

purpose.

Employers must make monthly Tax on Salary

declarations and payments not later than the 15th

day of the succeeding month. There is no annual

return.

Withholding of tax by the company (in advance

and pay to the tax department

Foreign Tax Credit

A resident tax payer who has received foreign

source salary and who have paid taxes

according to foreign tax law shall receive a

tax credit which is to be deducted from the tax

on salary to be paid in Cambodia under the

conditions that there is presentation of

documents confirming this payment abroad.

The reverse case is also applied, that is to say

a foreigner working in Cambodia has the right

to have a foreign tax credit also.