Property Tax in Cambodia: What You Need To Know
In the heart of Southeast Asia, Cambodia's real estate market is buzzing with potential, drawing in investors and homebuyers from around the globe. However, amidst the excitement of acquiring property lies a crucial element that can significantly influence your investment: property tax. As urban development surges and the demand for real estate grows, understanding the intricacies of property taxation becomes essential for making savvy financial decisions. In this article, we’ll delve into the key components of property tax in Cambodia, equipping you with the knowledge to navigate this vibrant landscape with ease and confidence.1. Transfer Tax (or Stamp Duty) The Transfer Tax, also known as Stamp Duty, is a mandatory tax imposed on property transactions in Cambodia. It is calculated at a rate of 4% of the property’s official assessed value, which is determined by the government and is typically lower than the market price. This tax is paid by the buyer and is a significant component of the overall cost of acquiring property. The Transfer Tax is levied to formalize the transfer of ownership and is paid during the property registration process. While the 4% rate is standard, exemptions or reductions may apply in certain cases, such as for low-value properties or specific government incentives. Proper payment of this tax ensures the legal transfer of property rights and is a critical step in securing ownership.Certain exemptions exist, such as for properties transferred between relatives or for government-conferred land rights, which may qualify for deductions from the taxable base. Recent amendments have extended tax relief measures for properties valued at or below $70,000 until the end of 2024, aimed at stimulating the real estate sector amidst economic challenges. The General Department of Taxation oversees the administration and collection of these taxes, ensuring compliance with local regulations.2. Annual Property Tax (ToIP)Once you obtain the hard title of the property, there's an annual obligation to pay for the tax of that property. Land, Homes, buildings, infrastructure,.... of immovable property.Tax on Immovable Property is imposed at 0.1% on the value of immovable property exceeding KHR 100 million (approximately USD 25,000). The value is assessed by the Immovable Property Assessment Committee.Key exemptions include properties valued at or below the threshold, agricultural land actively used for cultivation, properties owned by the government or diplomatic missions, and properties in Special Economic Zones serving agricultural, industrial, or service activities. Notification 014 further clarifies that agricultural land in urban areas, classified as such on the title deed, also qualifies for exemptions unless used for non-agricultural purposes. To encourage compliance, the government offers an amnesty program for unregistered properties or those with incomplete TIM declarations, allowing property owners to register and pay back taxes without penalties by June 2025.How to calculate and pay? To calculate the property tax, 80% of the tax base is used, $25,000 is subtracted, and then 1% of the total is calculated. The following is the formula for property taxes:((Tax Base)*80%)-$25,000)*0.1% is the property tax.For example: For a property with a $100,000 tax base, the property tax is calculated by taking 80% of the tax base ($80,000), subtracting $25,000 (resulting in $55,000), and then applying the 0.1% tax rate, which results in a property tax of $55.Taxpayers have the option to make payments either at their local tax office or through banks. For properties that are already registered, taxpayers must provide their Property Tax Registration ID or the tax payment receipt from the previous year. If the property is not yet registered, it is crucial for the taxpayer to promptly visit the local tax office responsible for the property and complete the registration process.To register a property, the following documents are generally required:Tax Form PT01: This form, issued by the General Department of Taxation (GDT), gathers specific details about the property.Tax Form PT02: Also issued by the GDT, this is the tax application form.Identification documents: These can include the property owner's National ID Card, Birth Certificate, or Passport.Proof of residence: This may include a residence book, a family book, or a residency letter.Depending on the property type and transaction, additional documents may also be required. It is advised to consult with the local tax office for a comprehensive list of necessary paperwork.3. Unused Land Tax (ULT)The Tax on Unused Land differs significantly from the annual tax on Immovable Property (ToIP) in Cambodia, particularly in its applicability and the zone it covers. While the ToIP is levied on property within the designated taxable zone, the ULT targets unused lands located outside these zones that exceed 5 hectares per plot. To be classified within the immovable property tax zones, the land must meet specific criteria: it must be located in defined urban areas, have a market value exceeding KHR 100 Million (around $25,000), and should not be an agricultural or exempted property like a charitable or government land. Even if the property is partially constructed, it can be taxed if it meets the conditions.The tax base is determined by the Land Evaluation Commission, and owners are permitted to deduct five hectares from the taxable area. This tax is levied at 2% of the market value on land that remains undeveloped or unutilized, as determined by the Unused Land Appraisal Committee.Exemptions are provided for cultivated agricultural land, land used for registered economic activities, and land within Special Economic Zones. The declaration and payment of The Tax on Unused Land have been suspended until the end of 2024, giving landowners time to prepare for compliance. Landowners must register and declare TUL annually by September 30.Note: if you own a property as a house/condo/building, you are not required to pay this tax. You're only required to pay Annual property taxes on Point #2. 4. Capital gain tax (CGT)Capital Gains Tax has been postponed for individuals until December 31, 2025, according to Instruction 014. Beginning in 2025, Capital Gains Tax will be subject to tax at 20% on gains from the sale or transfer of immovable property. Taxpayers can choose between an 80% flat deduction without documentation or an actual expense deduction supported by evidence. Exemptions include primary residences owned and used for at least five years and properties sold before the end of 2025.What is it? Capital Gains Tax is a tax imposed on the profit (or "gain") realized from selling or transferring immovable property. The taxable gain is determined by deducting eligible expenses from the sale price.Certain exemptions apply, including:Primary residences that have been owned and occupied for at least five years.Properties sold before the end of 2025.Calculation of Capital Gains TaxAs said, Capital Gains Tax is subjected to tax at 20% on the gain from the sale or transfer of immovable property. Taxpayers can choose between:Determination-Based Deduction: A flat 80% deduction from the total sale price, without requiring supporting documentation.Actual Expense-Based Deduction: Deduction of actual expenses incurred, including acquisition costs, holding costs, and transaction fees, provided they are supported by valid evidence.With the December 2025 deadline approaching, property sellers and investors should stay informed about compliance requirements to avoid unexpected tax liabilities when CGT enforcement begins.5. Tax on rental income In Cambodia, rental income tax is set at 10% of gross rental income but is rarely enforced for individual homeowners. It mainly applies to lease-registered and commercial properties, such as serviced apartments, where landlords must report rental income and expenses monthly. Most individual landlords do not declare or pay this tax, leading to low compliance. The tax calculation itself is very straightforward, 10% of the total rental income before deductions. For example, if a landlord charges $500 per month in rent, the corresponding rental income tax would be $50 per month ($500 × 10%).Despite existing legal requirements, enforcement mechanisms remain weak, and the government has yet to implement strict measures to ensure compliance. However, as Cambodia continues its push for tax reform and increased transparency, stricter enforcement could be introduced in the future. This would make it crucial for property owners to stay informed and prepared for potential regulatory changes.To Sum up, Property buyers, developers, and landowners are encouraged to stay informed about these updates and consult with the Ministry of Economy and Finance, licensed tax advisors, or trusted platforms like realestate.com.kh for tailored guidance and the latest insights.—--------------Interested in investing/buying a property in Cambodia, but need a professional consultant to guide you through the market, law, tax, and buying process here? Speak with our experts via -📞+855 92 92 1000📧 info@realestate.com.kh
