Whether buying a new property, renting out an apartment or selling your property, understanding Cambodia property tax can help you make informed decisions, comply with the law, avoid penalties and late fees and protect yourself from fraud.
“Cambodia’s real estate tax law has changed many times in the past decade. The recent laws are more strictly implemented, and additional laws are being introduced or in future consideration, says IPS Cambodia, Cambodia’s leading real estate agent.”
This guide aims to provide comprehensive and recent information on Cambodia’s property tax to buyers and sellers to understand the purpose, calculation and basis of taxes on real estate transactions.
As the leading real estate agent in Cambodia, IPS Cambodia can assist you in navigating the complex world of property taxes. We have extensive knowledge and experience in handling all aspects of real estate transactions, including tax compliance. By working with IPS Cambodia, you can ensure that you make informed decisions, comply with the law, and avoid penalties and late fees. Our team of experts will guide you through the entire process and provide you with all the necessary information to maximize your investment returns. We are committed to helping you secure your investment in Cambodia’s thriving real estate market by providing the best possible service and support.
Table of Contents
1. Property Tax:
1.1 Property tax, or TOIP (Tax on Immovable Properties), applies to properties valued over 100 Million Riels ($25,000).
1.2 It is collected annually at a rate of 0.1%.
1.3 The tax is not applicable on property below $25,000.
1.4 The tax base varies depending on building type, elevation, location, and age.
1.5 To compute the property tax, apply this formula: (($Tax Base * 80%) – $25,000) * 0.1%.
2. Tax on Unused Land:
2.1 Unused Land Tax is for non-constructed and abandoned constructed land in certain areas.
2.2 The tax encourages constructing or selling unused land in the city.
2.3 The tax is the property owner’s responsibility and must be paid by September 30th each year.
2.4 The Unused Land Tax is a 2% fee on the tax base, which is the actual value of the land evaluated in square meters.
3. Tax on Property Rental:
3.1 Property rental tax is set at 10% of the gross rental income.
3.2 Rent can be from leasing properties such as residential and commercial buildings, industrial equipment, floating homes, or land used for resource extraction.
3.3 This tax is collected from property owners or leaseholders.
4. Registration Tax (Transfer Tax):
4.1 Registration Tax is a 4% tax buyers need to pay on the transfer of ownership of real estate property or transfer of occupancy rights of the land.
4.2 In practice, the seller commonly pays this tax.
4.3 Transfers between spouses, parents and children, or grandparents and grandchildren are exempt from this tax.
5. Patent Tax:
5.1 Patent Tax is specific to business owners.
5.2 It is classified into three categories based on annual turnover Small taxpayers (250 Million Riel to 700 Million Riel), Medium taxpayers ($175,000 to $500,000), and Large taxpayers (over $500,000).
6. Additional Taxes for Non-Residents:
6.1 Non-residents or foreign nationals are subject to additional taxes.
6.2 Taxes on income,
6.3 Rental income tax
6.5 Capital gain Tax,
6.6 Corporate earnings.
6.7 These taxes range from 10% to 20%, depending on income.
7. Penalties on Tardiness and Tax Evasion:
7.1 Late payment of taxes incurs penalties ranging from 10% to 40% of the tax amount, plus 2% interest per month on underpaid taxes and late filing of the return.
7.2 Criminal offences, such as tax evasion or obstruction of tax implementation, can result in fines and/or imprisonment.
8. General Department of Tax Debt Collection:
8.1 Tax liabilities must be paid within 30 days of the tax debt collection notification letter.
8.2 If the taxpayer fails to meet the deadline, enforced tax debt collection and unilateral tax assessment may apply.
8.3 Confiscation of property, freezing of bank accounts, and cancellation of business licenses are possible consequences.
Tips for Paying Your Property Taxes in Cambodia
Follow these simple tips to ensure a smooth real estate investment experience in Cambodia.
- Use tools or apps to calculate your tax liabilities accurately, add reminders to pay the tax on time and do thorough research to maximize your investment returns.
- Consult tax law experts, attend seminars, or research online resources to stay updated on the latest tax developments.
- Maintain records of your property-related transactions, expenses, and income for accurately calculating your tax liabilities.
- Take professionals’ help to avoid discrepancies during tax audits and minimise the risk of penalties.
- Hiring a professional accountant or tax consultant with experience to identify tax-saving opportunities.
- Be familiar with your property’s zoning and valuation rules to estimate your tax obligations accurately.
- Use your negotiation skills for a lower sales price or rental rate for reduced registration tax and property rental tax liabilities.
- Pay attention to announcements from the General Department of Taxation.
- Stay transparent and cooperative with Tax authorities.
Conclusion
Our recommended tax strategy is to secure your investment in Cambodia’s thriving real estate market by educating yourself about the tax laws, maintaining accurate records, staying updated on tax guidelines, and seeking professional help when needed.