On 20 June 2025, the General Department of Taxation (“GDT“) issued Instruction No. 19116 GDT on Tax Obligation for Members of the Board of Directors (“BOD Members“) or Company Directors (“Instruction“). This Instruction reaffirms the obligation of Tax on Salary (“TOS“) and Withholding Tax (“WHT“) for resident and non-resident employees. GDT further urges all directors, managers, or owners of all enterprises to thoroughly examine and effectively implement this Instruction from the date of signing.
This Update sets out a high-level summary of the key features outlined under this Instruction.
Key Features
Work Status
A natural person shall be deemed an employee, if any two of the following conditions are met:
- The person bears no risk of not being paid, provided that the person has come to work at the designated place and has performed his/her work as stipulated in the employment contract, regardless of it being made orally or in writing;
- The person cannot independently set the time and location to perform his/her work;
- The person does not need to spend his/her personal capital to buy tools or equipment necessary for the work performance; or
- The person does not work simultaneously for multiple employers.
TOS
Regardless of where the salary originates, both resident and non-resident employees are subject to monthly TOS.
- For resident employees, TOS is imposed on:
- Salary from Cambodia source;
- Salary from foreign source;
- Cash advance; and
- Loans or instalment made by the employer to the employees.
- For non-resident employees, TOS is imposed on:
- Salary from Cambodia source.
Obligations on TOS for employees serving as a BOD Members or Company Directors
A BOD Member or Company Director working for a company in Cambodia, including those who have been temporarily designated for a specified period (under a secondment) from the parent company or headquarters, with or without a workbook, to perform work as a BOD Member or Company Director in Cambodia, and receives salary from performing such work, is subject to TOS regardless of where the salary is dispatched.
Obligation on WHT for a BOD Member or Company Director not serving as employee
Notwithstanding the above, a BOD Member or Company Director who performs work on behalf of a non-resident person, with or without workbook, or who is a resident or non-resident person performing work independently for a company in Cambodia, is subject to WHT on service as prescribed under Article 25 and 26 of the Law on Taxation.
A BOD Member or Company Director who meets the following conditions is exempted from TOS:
- Is represented in the enterprise’s memorandum and articles of association or patent tax, but does not have any daily executive roles in the enterprise in Cambodia;
- His or her roles are limited to attending the occasional meetings of the Board of Directors or shareholders; and
- Does not receive any salary from the enterprise in Cambodia.
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.
Disclaimer
Rajah & Tann Asia is a network of member firms with local legal practices in Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Our Asian network also includes our regional office in China as well as regional desks focused on Brunei, Japan and South Asia. Member firms are independently constituted and regulated in accordance with relevant local requirements.
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Please note also that whilst the information in this publication is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as legal advice or a substitute for specific professional advice for any particular course of action as such information may not suit your specific business and operational requirements. You should seek legal advice for your specific situation. In addition, the information in this publication does not create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on the information in this publication.
