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Payroll & Tax in Cambodia

Cambodia payroll & taxation

Depending upon whether your company employs foreign nationals or local Cambodian employees, there are a variety of specific rules regarding taxation and payroll in Cambodia. The primary concerns for a foreign company that needs to comply with tax laws in Cambodia are income tax, social security contributions to the National Social Security Fund and resident withholding tax.

Your Payroll Options in Cambodia

Remote Payroll

A remote payroll in Cambodia is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Cambodia. Many businesses with branches in Cambodia do not require payroll services all year round and therefore choose to outsource them to a remote payroll. Remote payroll services must complete the initial registration of companies and employees before going on to prepare monthly payroll and other required services.

Local Payroll Administration

In some cases, a company will register their business in Cambodia under one of the various business entity types available, but may prefer to have another company administer its payroll.  This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal Payroll

Larger companies with significant business involvement in Cambodia may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Cambodian payroll, and can fulfill all tax, withholding, and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Cambodian employment laws.

Fully Outsourced Payroll & Employment

Companies can outsource the employment and payroll of their staff in Cambodia to a GEO, like Shield GEO. This is possible for both foreign workers and Cambodian nationals. This is the easiest, fastest and safest way to payroll staff in Cambodia.

Shield GEO manages all aspects of payroll for workers in Cambodia, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

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Setting up payroll in Cambodia

Information Explanation
Currency ?

The official currency is the Cambodian Riel (KHR), although the US Dollar is used almost as frequently, if not more so, than the Riel.

Employee Information Required ?

Before payroll ledgers can be used, they must be numbered and initialed by the Labor Inspector. It must record:

  • Information about each worker employed by the enterprise, including name, date of birth, and address.
  • All indications concerning the work performed, wage and holidays.
Tax Registration Requirements ?

The following documents must be provided to the General Tax Department:

  • Memorandum and Articles of Association
  • Ministry of Commerce Letter of Approval
  • Certificate of Incorporation

This is obtained at one of the tax department branch offices at the Khan (district) level, of which there are 7 in each city. Businesses must then submit a written declaration to the Ministry of Labour.

Social Security Registration ?

The application form for the National Social Security Fund must be submitted, along with:

  • Relevant personal information such as name, address, date of birth, etc.
  • A list of the employees to be registered with the NSSF
Documentation Required for New Employees ?

The following documentation is required for new employees:

  • Employment contracts
  • Employment handbooks
  • Work permits for foreign workers
  • Evidence of established internal regulations, stipulating calculation and payment of wages, working hours, health and safety measures, and personal leave

Tax Figures

Information Explanation
Corporate Income Tax ?

20%, with the exception of mining companies (taxed at 30%), and insurance gross premiums (taxed at 5%).

Income Tax Rate ?
Grossed income Tax Rate (%)
KHR 0 – 500,000 0%
KHR 500,001 – 1,250,000 5%
KHR 1,250,001 – 8,500,000 10%
KHR 8,500,001 – 12,500,000 15%
KHR 12,500,001 and above 20%

Non-residents are taxed a flat rate of 20% on all Cambodian-sourced income.

Payroll Tax ?

N/A

Sales Tax ?

10% VAT

Withholding Tax ?

Withholding taxes include the following:
• Payment for services to a physical person: 15%
• Payments of royalties for intangible assets and interests in minerals, oil, or natural gas: 15%
• Interest payments: various rates depending on the recipient
• Income from rental or moveable or immovable property: 10%

Income Tax (Personal Allowance) ?

N/A

Employee Social Security (EE SS)

Employees do not make any contribution to the NSSF.

Employer Social Security (ER SS)

Employers are required to contribute 0.8% of the average monthly wage of workers to the National Social Security Fund (NSSF).

Payments

Information Explanation
Payment Mode ?

Direct bank account payment is the most common method.

Frequency of Salary Payment ?

26 fortnightly salary payments are stipulated by the Labour Code.

Invoice / Payslips required ?

Payslips must be distributed to staff before money is transferred to their account, written in both Khmer and English.

Minimum Wage ?

At present, a minimum wage is only applicable for the garment, textiles and footwear industry, which is $66 per month.

Employee Entitlements

Information Explanation
Working on Sundays ?

100% overtime pay is required if employees are requested to work on Sundays.

Disclosure and Confidentiality of Personal Information ?

Employees are protected from disclosure of personal information.

Employee Protection and Anti-discrimination Rights ?

The law provides that employers are required to protect employees from discrimination and sexual harassment, although it does not set out penalties if employers fail to do so.

Time Off Work ?

Full time employees, who work 48 hours a week, are entitled to 1.5 days of annual leave for one month of service. Payment of the wages during annual leave is required to be made before the worker takes their leave. This is organised individually with the employer.

Medical Leave ?

Workers are entitled to up to 6 months sick leave if medical certification is provided by a qualified doctor. For the first month, the employee is entitled to 100% of wages, then 60% for the second and third months, and unpaid leave for the fourth to sixth months.

Employment Termination

Information Explanation
Resignation / End of Service Payment ?

There is no payment for resignation on the employee’s part, unless the employer pushed the worker to resign through misconduct on the part of the employer. Unfairly dismissed workers are entitled to damages of at least the equivalent amount which they received as severance compensation upon contract termination.

Severance / Redundancy Pay ?

Severance pay is as follows:

  • 7 days wages for employment from 6-12 months; and
  • 15 days wages for every year of employment (up to a maximum of 6 months wages)
Termination of Employment ?
  • Contracts less than 6 months: 7 days notice required
  • Contracts more than 6 months: 10 days notice required
  • Contracts more than 1 year: 15 days notice required
  • Employee service between 2-5 years: 1 month notice required
  • Employee service between 5-10 years: 2 months notice required
  • Employee service more than 10 years: 3 months notice required
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