What types of business entities can be formed in Cambodia? What is the most common vehicle used by investors?

One of the first steps that any investor will take is to select the right structure for their investment. The 2005 Law on Commercial Enterprises lists the principal forms, from limited liability companies to partnerships. The most common type of business structure is the  private limited company.

How does an investor set up a limited company.? What are the capital requirements? What are the shareholders liabilities?

It is a routine process to set up a limited company. . The first step is filing an application with the Ministry of Commerce. The Law on Commercial Enterprise requires a minimum capital investment of four million Riel, or about US $1,000, at the current exchange rate. A shareholder’s liability is limited to the value of his/her capital contribution.

Can a business be 100% foreign-owned?  Is a foreign enterprise required to have a Cambodian partner?

Generally, a business can be 100% foreign-owned. The principal exception is when a company owns land, in which case the company must have majority Cambodian ownership.

What government approvals, permits and licenses are required? Which ministries or other government institutions are in charge of granting licenses and approvals?

All businesses need a Commercial Registration Certificate (also known as a Certificate of Incorporation or Business Certificate) from the Ministry of Commerce; a Patent Tax Certificate and a VAT certificate from the Tax Department of the Ministry of Economy and Finance; and an Office Registration Certificate from the provincial or municipal Office of Commerce.

Some businesses, such as information and communication technology (ICT), banking, insurance, mining, oil and gas, telecommunications, medical, constructions and real estate, require specialized licenses from other government offices.

Can these licenses and permits be assigned?

An investor can assign government approvals to a third party simply by filing a notification with the Ministry of Commerce and the Tax Department. However, the assignment of specialized licenses may need prior approval from the relevant ministries or government institutions.


How long does it take to get necessary approvals, permits and licenses? Is there a One-Stop-Shop system to make the process easier?

It generally takes 2 to 4 weeks to obtain necessary approvals to open a company. VAT registration will take up to 2 months however business can be conducted during this period.

For the time being, the government only coordinates a One-Stop- Shop system for setting up an investment project company, not for a regular Private limited company or limited company. . This is supervised by the Council for the Development of Cambodia (CDC).

When is registration required? Are there any penalties for failure to register?

A company engaging in a commercial activity must be listed on the Commercial Register of the Ministry of Commerce. Within 15 days of commercial registration with the ministry the business must register with the tax administration. Failing to register with the tax administration is subject to a fine and  penalty as levied by the General Department of Taxation. The tax administration can register companies that fail to do so and determine the effective dates of those registrations. As a result, companies that have not registered could owe back taxes.

The tax administration is required to send a reminder letter to a taxpayer at least 15 days before proceeding with any recovery measure, which can include a lien or confiscation and can request that other authorities nullify various permits and licenses. Such action could result in cancellation of the business license or the de-registration of the company from the Commercial Register.

What kind of information must an investor disclose and report in applying to register a company and an investment project? Does this information become available to the public and competitors?

For the purposes of establishing a company the Ministry of Commerce does not require financial statements or project information. However, an investor needs to disclose to the CDC information concerning corporate structure, investment plans, sub-projects, and development schedules. Information about the corporate structure is considered public but most other information is kept confidential.

Are share certificates issued? What is required to transfer shares?

The Law on Commercial Enterprise states that the company will issue share certificates for subscribed shareholders. In practice, however, most companies do not fulfill this requirement because the ownership of the shares will be effective only once the name of the shareholder is recorded at the commercial registrar. Registration is required. Transfer of shares requires that the parties notify the Ministry of Commerce, which will examine the transfer before approving it. The share transfer process can take approximately 30 days including registration with and stamp tax payment to the GDT.

Is a company required to carry insurance? If so, what kinds of risks are insured?

Insurance law Cambodia is still under development. The existing law basically covers many types of liability risks and medical risks, but not business risks. Risks fall into two categories in the law: Risks against property or benefits in relation to the property; and risks against life, health and physical injury. Certain companies – in particular those using motor vehicles or engaged in construction – are required to carry liability insurance.

Does Cambodia have Special Economic Zones? What benefits do they offer an investor? Are there any special rules to follow?

Aware of the success of SEZs in attracting investment, increasing exports and creating jobs in other countries, the government has instituted a system for establishing and regulating these separate, fenced customs territories. The CDC is the government office that approves and regulates SEZs. The CDC has approved a number of SEZs including the Manhattan Special Economic Zone in Svay Reing Province near the Vietnamese border and the Phnom Penh Special Economic Zone (publically listed on the Cambodia Securities Exchange). In addition SEZs are in operation in Sihanoukville, Poipet and Koh Kong. All business activities allowed in Cambodia are allowed in SEZs. There are no special restrictions of business activities in SEZs. Businesses locating in an SEZ that are approved as Qualified Investment Projects (QIPs) are eligible for all QIP benefits and incentives. In addition QIPS located in SEZs are also entitled to VAT exemption for imports (this does not apply to QIPS located outside of SEZs). SEZ customs regulations generally allow a free flow of materials and products into and out of the SEZ, although goods that move into the country for retail are subject to standard import duties. SEZs offer investors One-Stop-Shop permitting and other benefits.

The Investment Law

Cambodia has adopted a liberal foreign direct investment policy without bias or discrimination. The open door policy imposes few restrictions on foreign investment, and with its potentially abundant natural resources, relatively inexpensive and motivated labor force and warm climate, Cambodia offers advantages and significant potential in many industries. These include agriculture and agro-industry, food processing, tourism, mining, land labor intensive industries such as manufacturing and service industries. Cambodia’s rich historical heritage and beautiful coastline, mountains and forest offer foreign investment opportunities as well. Cambodia offers guarantees, incentives and simplified investor friendly procedures.

Where do you start when you want to invest in Cambodia?

For many investors, the place to start is the Council for the Development of Cambodia (CDC) for Qualified Investment Projects (“QIP”). Established by the 1994 Law on Investment, the CDC is the one-stop decision-making body for private and public sector investment. It is chaired by the Prime Minister and composed of senior ministers from various government agencies. The Cambodian Investment Board (CIB) is the CDC’s operational arm for private sector investment. The CIB reviews investment applications and grants concessions to investors and investment projects meeting the requirements laid out in the Investment Law

What incentives and other benefits does the country offer investors? Are there other benefits? What are the exceptions?

An investment project approved by the CDC as a Qualified Investment Project (QIP) is eligible for a variety of investment incentives. These include a profit tax exemption or special depreciation (but not both) and Customs duty exemptions up to 100 % of export tax. As mentioned in question 11, for QIPs located inside SEZs there is an exemption for VAT on imports. Recently, the government has introduced a number of tax incentives for certain areas of investment.. Cambodia has also ratified Double Taxation Avoidance Agreements with a number of counter-party countries with more expected to come.

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