This law is adopted by the National Assembly of the Kingdom of Cambodia
on January 8, 1997 at the 7th session of the 1st legislature.
Chapter 1: Provisions For The Tax On Profit
Section 1: General Provisions
Article 1: Change to Tax
The provisions for the tax on profit as stated in the Finance Act of 1994 promulgated by the Royal Kram No. 02NS dated 28 December 1993, the Amendment to the Finance Act of 1994 promulgated by the Royal Kram No. 08NS dated 30 November 1994, the Finance Act of 1995 promulgated by Royal Kram No. 11NS94 dated 31 December 1994, and the Amendment to the Finance Act of 1995 promulgated by Royal Kram No. CS/RKM/0995/01 dated 01 September 1995 shall be amended as follows for the benefit of the State budget.
Article 2: Object of the Tax
The tax of profits is the debt of a resident person on income from Cambodian sources and income from foreign sources and of a non-resident person on income from Cambodian sources.
Article 3: Definitions
For the purposes of the tax provisions:
1. The term “resident taxpayer” means:
a. any physical person who is domiciled in or has a principal place of abode in, the Kingdom of Cambodia, or who is present in the Kingdom of Cambodia on more than 182 days during the calendar year;
b. any legal person or pass-through organized or managed in the Kingdom of Cambodia, or having its principal place of business in the Kingdom of Cambodia. A permanent establishment shall be considered a resident legal person with respect to its Cambodian source income only.
2. The term “non-resident” means not a resident of Cambodia.
3. The term “legal person” means any enterprise or organization carrying on a business whether or not officially recognized by the competent institutions of the Royal Government. The term “legal person” includes any government institution, religious organization, charitable organization, or non-profit organization. For a non-resident person, the term “legal person” means any permanent establishment in the Kingdom of Cambodia. The term “legal person” does not include a pass-through or a sole proprietorship.
4. The term “permanent establishment” means a fixed place of business in the Kingdom of Cambodia, the branch of a foreign company or an agent resident in the Kingdom of Cambodia, through which the non-resident person carries on their business. The term “permanent establishment” also includes any other association or connection through which a non-resident person engages in economic activity in the Kingdom of Cambodia.
5. The term “pass-through” means a general partnership with up to 10 resident individual partners in which the proportional sharing by the partners of items of capital, profit, and loss meet the criteria which shall be determined by sub-decree. In this definition, a “pass-through” cannot be a member of another partnership and does not include a corporation, a permanent establishment, or a sole proprietorship.
6. The term “sole proprietorship” means a business enterprise owned 100 percent by one physical person. In this definition, a husband and wife and their dependent children shall be treated as one physical person.
7. The term “business” means a person’s economic activity the aim of which is to derive income from the production and sale of goods, the supply of services, the lease, rental or sale of property, or any other activity.
8. The term “dividend” means any distribution of money or property that a legal person distributes to a shareholder with respect to the shareholder’s equity interest in such legal person, with the exception of stock dividends and distributions in complete liquidation of the company. Whether or not a distribution is a dividend shall be determined under the preceding condition without regard to whether or not the legal person has current or accumulated income or profits or earnings.
9. The term “shareholder” means any person owning an equity interest in a legal person. For the purposes of this tax a legal person which is not a corporation shall be treated as if it were a corporation and any person who holds an equity interest in, or may otherwise gain income or profit as a participant in such a legal person shall be treated as a shareholder of such legal person.
10. The term “investment enterprise” means an enterprise that the Council for the Development of Cambodia has recognized as an investment enterprise and that has registered with the tax administration.
