Cambodia MEF Issues Prakas to Impose Capital Gains Tax on Resident and Non-Resident Taxpayers

Introduction

On 18 July 2025, the Ministry of Economy and Finance (“MEF“) issued Prakas No. 496 on Capital Gains Tax (“Prakas“), which aims to establish the rules and procedures for managing the collection of capital gains tax (“CGT“) of 20% of the capital gains from both resident and non-resident taxpayers.

Under this Prakas, resident taxpayers are subject to CGT on capital gains realised from the sale/transfer of capital assets located in Cambodia and overseas. In contrast, non-resident taxpayers are subject to CGT solely on capital gains realised from the sale/transfer of capital assets located in Cambodia. Article 3 of the Prakas explicitly defines a resident taxpayer as being limited to a natural person resident taxpayer, whereas a non-resident taxpayer includes both a natural person and a legal entity non-resident taxpayer.

This Update will highlight the key features of the Prakas as follows:

1. Definition of “capital asset” and “capital gains”;
2. Instances in which capital gains are realised;
3. Methods of calculating capital gains for the purpose of determining CGT;
4. Exempt transactions;
5. CGT with respect to capital gains realised from overseas properties;
6. Withholding obligations of CGT;
7. Consequences of failing to pay CGT; and
8. Commencement of the implementation of CGT.

Key Features

1. Definition of “Capital Asset” and “Capital Gains”

The Prakas provides definitions for the following terms:

• Capital Asset: refers to six types of property, including immovable property, lease, investment asset, goodwill, intellectual property, and foreign currency.

• Capital Gains: refers to a taxable income derived from the proceeds of the sale or transfer of the capital asset less allowable expenses.

2. Instances in which Capital Gains Are Realised

The Prakas sets out the instances in which capital gains are realised:

• For Capital Assets:
  1. When there is a sale, transfer, or creation of the possession rights on a capital asset;
  2. When a registration is made with the relevant competent authorities on the transfer of ownership or possession rights of a capital asset; or
  3. When there is a transfer of ownership or possession rights of a capital asset through a final and binding court judgment.

• For Shares:
  1. When the Ministry of Commerce recognises the transfer of shares;
  2. When the shareholder who sold or transferred the shares loses his right to control the shares; or
  3. When there is a full payment for the sale/transfer of the shares.

3. Methods of Calculating Capital Gains for the Purpose of Determining CGT

Where the capital asset is an immovable property, there are two methods to calculate the capital gains for the purpose of CGT as follows:

• Fixed percentage cost method: a taxpayer can deduct 80% of the sale/transfer proceeds as the assumed total cost of such immovable property.

• Actual cost method: actual expenses incurred pertaining to the immovable property and evidenced by proper supporting documents, including invoices, receipts, agreements, are allowed as deductible expenses.

For a capital asset other than immovable property, only the actual cost method is allowed for the purpose of capital gains calculation.

The calculation of capital gains or losses of a capital asset is treated separately. When the actual cost method is used and the actual expenses incurred are greater than the sale/transfer proceeds, the surplus is not allowed to be claimed as a refund or used to set off against capital gains of another capital asset.

For the purpose of determining the CGT, sale/transfer proceeds and deductible expenses of properties other than shares are determined as follows:

• Sale/transfer proceeds: shall be evidenced in the sale and purchase agreement or similar supporting documents. If the General Department of Taxation (“GDT“) determines that the proceeds stated in the sale and purchase agreement do not showcase the real value, it can re-assess the sale/transfer proceeds of the property in accordance with:
  1. the real value stated in the real sale and purchase agreement found by GDT;
  2. the value attributed to the immovable property as detailed in the Annex to the Prakas on Determination of Tax Base of Registration Tax for Transfer of Property Ownership or Possessory Right; or
  3. a value determined by the property evaluation committee for the CGT.

• Deductible expenses: include the purchase price and other expenses that have been incurred during the acquisition, possession, or transfer of the property, including but not limited to the following:
  1. Consulting fee;
  2. Registration tax paid when the property was purchased;
  3. Annual property tax or unused land tax paid;
  4. Expenses relating to cadastral or land administration fees;
  5. Expenses on commercial advertising;
  6. Commission fee;
  7. Property evaluation fee;
  8. Administrative fee when obtaining a loan to purchase the property;
  9. Interest expenses relating to the loan obtained to purchase the property during the occupancy of the property;
  10. Maintenance and renovation of the property;
  11. Expenses on the creation or protection of property possession rights; and
  12. Any other related expenses incurred.

For the purpose of determining the CGT, sale/transfer proceeds and deductible expenses of shares are determined as follows:

• Sale/transfer proceeds: shall be evidenced in the shares sale and purchase agreement or similar supporting documents. Sale/transfer of shares under this Prakas shall refer to any transaction or event that results in the taxpayers losing the right, control, or management of any portion or all of the shares. For other transactions that are treated as sales/transfers but are not backed by a contract, sale/transfer proceeds shall be valued based on the market price.

• Deductible expenses: include paid-up capital or equity, acquisition cost of shares during the conduct of business or capital increase, and expenses related to the sale/transfer, including but not limited to consulting fee, commission fee, share evaluation fee, and other direct related expenses.

4. Exempt Transactions

CGT can be exempted in the following cases:

• Sale/transfer of:
  1. Agricultural land owned or possessed by citizens who are actively cultivating crops, supported by an approval letter or confirmation letter from the local authority or GDT;
  2. The residence which is the principal place of residence of a taxpayer for at least five years prior to the sale/transfer. In the event that the taxpayer has more than one residence or a taxpayer and his/her spouse have different residences, only one residence shall be permitted as the principal place of residence;
  3. Immovable property among relatives through succession/first time gift between biological parents and their children, husband and wife, biological grandparents and their grandchildren, biological parents and their children and their children’s spouse, and between biological grandparents and their grandchildren and their grandchildren’s spouses for the purpose of establishing common property;
  4. Property owned by a governmental institution;
  5. Property owned by a diplomatic mission, foreign consulate, international organisation or technical cooperation agency of other governments; or
  6. Properties used for the public interest in accordance with the Law on Expropriation.

• Issuance of new shares for the purpose of increasing capital or injecting new investment into the company shall not be considered as a sale/transfer of shares that is subject to CGT.

In addition, withholding taxes are exempted in the following cases:

• Non-residential taxpayers who have the obligation to pay CGT in the sale/transfer of any part or all of the shares in the equity or capital of an enterprise that has retained earnings shall be exempted from withholding tax on dividend distribution.

• A taxpayer who has realised capital gains subject to CGT shall be exempted from withholding tax on payments of Cambodian sourced income in accordance with Article 33 of the Law on Taxation.

5. CGT with Respect to Capital Gains Realised from Overseas Properties

In relation to capital gains realised from an overseas property, the resident taxpayer is required to pay CGT to the GDT only with respect to the difference between the lower amount of CGT paid overseas and the CGT calculated in accordance with this Prakas.

6. Withholding Obligations of CGT

The following parties are responsible for withholding CGT and declaring to GDT: 

• Enterprise: when there is a sale/transfer of shares by the shareholders;
• Settlement agent: when there is a sale/transfer of investment assets in the form of securities listed on the Cambodia Securities Exchange; and
• Settlement agent: when there is a trading of foreign exchange and other financial assets transactions made by a person through enterprises licensed by the Securities and Exchange Regulator of Cambodia.

7. Consequences of Failing to Pay CGT

Taxpayers are required to file a tax return and pay the applicable CGT to GDT within three months upon the realisation of the capital gains.

It is important to note that failure to pay the applicable CGT shall render the transfer of the ownership or possessory right over a capital asset legally incomplete.  

8. Commencement of the Implementation of CGT

CGT realised from the sale/transfer of lease, investment asset, goodwill, intellectual property, and foreign currency shall be implemented from 1 September 2025 onward. CGT realised from immovable property shall be implemented from 1 January 2026 onwards.

It should be noted that CGT realised from the indirect sale or transfer of shares shall be governed under separate provisions.

If you have any queries on the above, please feel free to contact our team members listed here, or our Tax Manager Chum Socheat who will be happy to assist.