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Investment Incentives

1.   Investment Incentives Granted to a Qualified Investment Project (QIP)

QIPs are entitled to the following investment incentives (“Amended Law on Investment”):

・  QIPs may elect to receive a profit tax exemption or use special depreciation.

・  Profit tax exemption (Selective): A tax holiday period is composed of “Trigger period” + 3 years + Priority Period (Maximum total 9 years)

– Maximum Trigger Period: commencing on the issuance of the Final Registration Certificate and ending on the last day of the taxation year immediately preceding the earlier of:

(a)    if the QIP derives a profit, the taxation year that the profit is first derived; and

(b)   if the QIP derives income from the Investment Activity in respect of the sale of goods or services, the third taxation year after the taxation year in which the income is first derived.

– Priority Period: To be determined by the Financial Management Law, within the period of 3 years, according to the type of project and investment capital (For light industries: 0 year in case of investment capital of below US$ 5 million, 1 year in case of investment capital between US$5 million and 20 million, 2 years in case of investment capital over US$ 20 million)

・  An annual Certificate of Obligation Satisfaction (or “Certificate of Compliance”) has to be obtained by the QIP to be entitled “Profit Tax Exemption”.

・  A QIP shall be subject to a profit tax rate after its tax exemption period as determined in the Law on Taxation

・  Special depreciation (Selective): 40% special depreciation allowance on the value of the new or used tangible properties used in the production or processing.

・  Duty free import of production equipment, construction materials, etc. as shown in the following table.

Duty-Free Import for QIPs

Type of QIP

Commodities to be imported free of duty

Domestically oriented QIPs Production equipment, construction materials and production input to be used in the production of exports goods
Export oriented QIPs (except those which elect or which have elected to use the Customs Manufacturing Bonded Warehouse mechanism) Production equipment, construction materials, raw materials, intermediate goods and accessories
Supporting Industry QIPs Production equipment, construction materials, raw materials, intermediate goods and production input accessories. In the case where the Supporting Industry QIP fails to supply 100% of its manufactured products to the export industry or directly export its products, the QIP shall pay the customs duties and taxes on production inputs for the quantity that has not been supplied to the export industry or directly exported


・  A QIP located in a designated SPZ or EPZ: To be entitled to the same incentives and privileges as other QIP stipulated in the Amendment to the LOI.

・  A QIP shall be entitled to 100% exemption of export tax, except for activities as stipulated in laws in effect.

・  The rights, privileges and entitlements of a QIP can be transferred or assigned to a person who has acquired or merged a QIP subject to the approval of the CDC or PMIS.


Projects not Eligible for the Incentives

The investment projects listed in Section 2 (Investment Activities Not Eligible for Incentives) of Annex 1 of the Sub-Decree No.111 are not eligible for investment incentives. Those investment projects include the following:

・  All kinds of commercial activity, import, export, wholesale, and retails, including duty free shops

・  Any transportation services by waterway, by road, by air except investment in the railway sector

・  Restaurants, karaoke parlors, bars, nightclubs, massage parlor, fitness, etc.

・  Tourism service

・  Casino and gambling business

・  Currency and financial business and services such as banks, financial institutions, and insurance companies

・  Activities related to newspaper and media, including radio, television, press, magazine, etc.

・  Professional services

・  Production and processing of wood products using wood from natural forest with a legal domestic supply source for raw materials

・  Complex resort, including hotel, theme park, sport facilities, zoo with less than 50 hectares

・  Hotel below 3-star grade

・  Real estate development, warehouses facilities


Projects Eligible for the Incentives

Section 2 of Annex 1 of the Sub-Decree No.111 also sets the minimum amount or other conditions of investment projects in various fields, which are required for granting the incentives. Some of those requirements are shown in the following table.


Minimum Conditions Required for the Provision of Incentives

Fields of Investment

Requirement for Investment

Supporting industry, which has its entire production (100%) supplying export industry

US$100,000- or more

Production of animal feed

US$200,000- or more

Production of leather products and related products

Production of all kinds of metal products

Production of electrical and electronic appliances and office materials

Production of toys and sporting goods

Production of motor vehicles, parts and accessories

Production of ceramic products

US$300,000- or more

Production of food products and beverages

Production of products for textile industry

Production of garments, textiles, footwear and hats

Production of furniture and fixtures that do not use natural wood

Production of paper and paper products

Production of rubber products and plastic product

Clean water supplies

Production of traditional medicines

Freezing and processing of aquatic product for export

Processing of any kind of cereals and crop products for export

US$500, 000- or more

Production of chemicals, cement, agriculture fertilizer and petrochemicals Production of modern medicines

US$1,000,000- or more

Construction of modern market or trade center

US$2,000,000- or more

More than 10,000 square meters

Adequate space for car park

Training and educational institutes that provide training for skill development, technology or poly technology that serves industries, agriculture, tourism, infrastructure, environment, engineering, sciences and other services.

US$4,000,000- or more

International trade exhibition center and convention halls

US$8,000,000- or more


2.   Investment Incentives Granted to a Project in SEZ (Chapter 4, the SEZ Sub-Decree)


The SEZ Sub-Decree sets forth that the CSEZB shall examine and provide incentives to all the SEZs and that all the incentives shall be specified in the FRC.


As the Law on Amendment to the Law on Investment of 2003 defines in Article 14.9, a QIP located in a designated Special Promotion Zone (SPZ) or Export Processing Zone (EPZ) is entitled to the same incentives and privileges as other QIPs stipulated in the Law. The incentives to be granted to the Zone Developers and Zone Investors are summarized below in the following table.


Incentives in the SEZ



Zone developers –       The exemption period for the Tax on Profit shall be provided for a maximum period of 9 years, in compliance with article 14.1 of the Law on the Amendment to the Law on Investment.

–       The import of equipments and construction materials to be used for infrastructure construction in the zone shall be allowed and exempted of import duties and other taxes.

–       The Zone Developer shall receive custom duty exemption on the import of machineries, equipments for the construction of the road connecting the town to the zone, and other public services infrastructures for the public interests as well as for the interests of the zone.

–       The Zone Developer may request, under the form of a temporary admission (AT), the import of means of transport and machineries used for the construction of the infrastructures in accordance with the laws and regulations in force.

–       The Zone Developer may obtain a land concession from the State for establishing the SEZ in areas along the border or isolated region in accordance with the Land Law, and may lease this land to the Zone Investors

Zone investors –       The same incentives on customs duty and tax as other QIP shall be entitled.

–       The Zone Investor entitled to the incentive* on Value Added Tax (VAT) at the rate of 0% shall record the amount of tax exemption for its every import. The said record shall be disregarded if the Production Outputs are re-exported.  In case the Production Outputs are imported into the domestic market, the Zone Investor shall refund the amount of Value Added Tax as recorded in comparison with the quantity of export.

Note: The Zone Investor entitled to the incentive: Investors such as garment and footwear manufacturers, their supporting industries or contractor.

Common –       Zone developers, investors or foreign employees have the right to transfer all the income derived from the investment and salaries received in the zone to banks located in other countries after payment of tax.

–       The Zone Developer and the Zone Investor are entitled to obtain the investment guarantees as stated in Article 8, Article 9 and Article 10 of the Law on Investment in the Kingdom of Cambodia and other relevant regulations.

–       Non-discriminatory treatment as foreigners, non-nationalization and no-fixing price



Additional Incentives to the SEZ

(a)    Incentive on VAT Exemption (the Prime Minister’s Notation on Letter #2128 SHV (MoEF) dated on 2 March 2010 of Ministry of Economic and Finance on the request to continue the temporary suspension of VAT for the investors in the Special Economic Zones)

Incentive on VAT exemption to the investors located in the SEZ has been extended without specific time limit. The imposition of VAT shall be automatically suspended for the followings. This incentive shall not be applied to the immovable property development project in the SEZ.

–   The construction materials, production equipments and materials to be imported by Export-oriented QIP in SEZ.

–   The construction materials and production equipments to be imported by Domestic Manufacturing QIP in SEZ.

–   Products produced by QIP in the SEZ, which will become the production input to other QIP in the same SEZ

(b)   It has been decided that the special customs procedures shall be applied to the SEZ (Prakas No. 734 MEF on the Special Customs Procedures to be implemented in SEZ, dated September 11, 2008).

1)   SEZ located within 20km from the official border

–   For importation: At border check point, only present and provide the duplicated copies of goods and not required to submit customs declaration. No customs seal shall be affixed. The goods shall be transported through the Seamless Route. At SEZ gate, submit Customs Summarized Declaration. Customs officers shall preliminarily verify the identification of involved staff, mean of transport and related documents then allow the goods to be transported to investor’s premise. Importer can use the imported goods without the presence of customs offices.

–   For exportation: The customs procedure must be conducted in the SEZ. If no irregularity found, goods shall be immediately released to the border with copy of relevant export documents. At border check point, present the customs export documents to customs officer for verification. If no irregularity found, the goods shall be released for export.

2)   SEZ not located within 20km from the official border

–   For importation: Applying the National Transit Procedure. Containers must be sealed by customs officers.

–   For exportation: The customs procedures must be conducted in the SEZ and the container be sealed before shipping out to border.



3.   Incentives Entitled to Specific Fields


Despite the provisions regarding the investment incentives for QIPs under Chapter 5 of the Amended Law on Investment, the industry-specific or additional incentives have been introduced by the RGC in forms of Prakas or other regulations.

・  Import duty reduction or exemption and the government-borne VAT scheme (VAT exemption) have been introduced on various agricultural materials such seeds, breeds or residues and agricultural machines including tractors. : Prakas No.390 (MEF) on Adjustment to Customs Duty and Imposition of VAT borne by the State.

・  QIPs in the area of agriculture and agro-industry may obtain incentives in the form of a priority period of tax exemption on profit for three (3) years. Investment activities in the area of agriculture and agro-industry shall receive such incentives according to the Sub-Decree relating to the Implementation of the Law on Investment. : Royal Kram NS/RKM/0609/009 on Promulgation of the Law on the Adjustment to the Law on Financial Management for the Year 2009 of June 20, 2009

・  VAT on the imported production input by garment factories is exempted as long as the final products are exported. The Letter No.110 SCN.CS of the Council of Ministers of January 27, 1999

・        VAT on the imported production input and equipment of supporting industry, who serves to the export of garment, textile or footwear, shall be exempted. The supply of the products or services for the export of the garment by the supporting industry or contractor shall be exempted. : Prakas No.298 (MEF) on the Implementation of VAT for Supporting Industry or Contractor who Supplies Products for the Exports of Garment, Textile and Footwear.

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Key Actors

ministry-of-information Ministry of Information
ministry-of-public Ministry of Public Works and Transport
ministry-of-education Ministry of Education, Youth and Sport
ministry-of-tourism Ministry of Tourism
ministry-of-agriculture Ministry of Agriculture, Forestry and Fisheries
ministry-of-mines-energy Ministry of Mines and Energy
ministry-of-commerce Ministry of Commerce
General Department of Taxation General Department of Taxation
General Department of Customs and Excise General Department of Customs and Excise
Ministry of industry and handicraft Ministry of industry and handicraft
Ministry of Economy and Finance Ministry of Economy and Finance
Ministry of Foreign Affairs and International Cooperation Ministry of Foreign Affairs and International Cooperation
Electricite Du Cambodge Electricite Du Cambodge
Ministry of Labour and Vocational Training Ministry of Labour and Vocational Training
Ministry of Environment Ministry of Environment
Ministry of Interior Ministry of Interior
Ministry of Post and Telecommunication Ministry of Post and Telecommunication


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