Learn About The Latest Property-Related Taxes And Exemptions For 2024

In early January, the Cambodian government announced a number of property-related taxes and fees exemptions in 2024 aimed at boosting the real estate sector.

At this time, Compass Real Estate will introduce the types of taxes, including tax rates and exemptions for 2024 to help you who intend to buy, sell or rent their property to avoid confusion or penalties.

Definition

Registration Tax (Stamp Duty) a type of tax levied on the transfer of ownership or possession of a property, a tax payable when buying, selling or exchanging or donating real estate or placing real estate shares in a company.

Taxpayer

The taxpayer is the last person to own or possess the property, usually the buyer, but both parties can negotiate a contract of sale. The taxpayer is obliged to submit the declaration and pay the registration tax  in full within 3 months after the transfer of rights in accordance with the procedure.

Tax rate, Tax base and Tax calculation

The registration tax is determined at the rate of 4% of the tax base, with the tax base being the total property value (land or construction) determined by the Property Appraisal Commission.

+ Tax calculation

With tax incentives

Tax base = total property value - tax incentives

⇒ Tax to be paid = tax base * 4%

Without tax incentives

⇒ Tax to be paid = total property value * 4%

Tax exemption

● Succession between parents and children between husband and wife, between grandparents and grandchildren

● The first donation between the above relatives

● Economic or social land concessions to the poor people for housing or agro-industry or family agriculture

● Real estate registered in the inventory of state institutions of foreign embassies or consulates or international organizations or governmental technical cooperation agencies.

Tax incentives

A/ Transfer of ownership or possession of property in the "relative circle" between parents-in-law and children-in-law or between siblings and siblings

The above cases are allowed to be deducted from the stamp duty base:

Succession: 200,000,000 Riels equal to 8,000,000 Riels in tax

Donation: 100,000,000 Riels equal to 4,000,000 Riels in tax

In case there is more tax to be paid, the excess must be paid.

B/  Donation from the "second time" on the same property in the relatives between parents and children, between husband and wife, between grandparents and grandchildren, from parents to children and spouses (joint property of the couple during marriage) and from grandparents to grandchildren and spouses (joint property of the couple during marriage)

The above case is allowed to be deducted from the stamp duty base of 100,000,000 Riels equal to the tax amount of 4,000,000 Riels.

In case there is more tax to be paid, the excess must be paid.

★ Notice

According to the announcement of the Ministry of Economy and Finance on January 5, 2024, the stamp duty on the transfer of ownership or possession of real estate will continue to be exempted until the end of 2024 under the following conditions:

1/ Continue to exempt the stamp duty on the transfer of ownership or possession of all types of housing in the form of a Borey with a value of less than or equal to 70,000 USD until the end of 2024.

2/ Additional stamp duty exemption on the transfer of ownership or possession of all types of housing in the form of a Borey and worth more than $70,000, allowing to deduct $70,000 from the stamp duty base for the purchase of houses in Boreys that have a real estate business license and are properly registered until the end of 2024.

Definition

Tax on Property (Property Tax) is an annual tax levied on property worth more than 100 million Riels and is located in the geographical area of the Capital and Municipal Administration of the provinces in the Kingdom of Cambodia.

Taxpayer

The taxpayer is a natural or legal entity whose owner or occupant or final beneficiary of the property. Taxpayers are required to register with the tax administration no later than September 30 of each taxable year.

Tax rate, Tax base and Tax calculation

The property tax is collected annually at the rate of 0.1% on a taxable basis. The tax base is 80% of the total property value (either land value or construction cost) according to the age of the construction and the type of construction determined by the Real Estate Appraisal Commission, minus the amount of 100,000,000 Riels for a property.

+ Tax calculation

⇒ Tax to be paid = tax base * 0.1%

Tax exemption

● Agricultural land (not excluding any portion that does not directly and permanently serve agricultural activities)

● Real estate of the Royal Government or government institutions (Real estate of public enterprises or state-owned companies is not tax-exempt)

● Real estate owned by any community or individual for purely religious and charitable purposes

● Real estate owned by foreign diplomatic missions or consulates and international organizations and foreign technical cooperation agencies

● Real estate as infrastructure

● Real estate built on agricultural land that directly and permanently serves agricultural activities

● Real estate affected by the case of force majeure

● Houses, buildings and structures under construction and less than 80% and not yet in use, but the land is subject to property tax.

● Real Estate in Special Economic Zones

★ Notice

According to the announcement of the Ministry of Economy and Finance, the exemption of administrative sanctions (additional tax and interest) which will expire by the end of 2023 will be postponed until the end of June 2024.

Definition

Unused Land Tax (Tax on Unused Land) is a type of tax levied annually on non-structured land and abandoned land located in cities and in areas designated by the Unused Land Appraisal Committee (ULAC) .

Taxpayer

The taxpayer is a natural or legal entity whose owner or occupant or final beneficiary of the land. Taxpayers are required to register with the tax administration no later than September 30 of each taxable year.

Tax rate, Tax base and Tax calculation

This tax is set at the rate of 2% of the tax base.

The tax base is the land price based on the market price in each city and region, which is assessed according to the price per square meter designated by the Unused Land Appraisal Committee.

+ Tax calculation

Calculation of tax payable for the period from 2025

⇒ Tax to be paid = (Total area - 5 hectares) * Price of land per square meter * 2%

★ Notice

According to the announcement of the Ministry of Economy and Finance, the tax on unused land has been suspended until the end of 2024, meaning that the owner or occupant or the final beneficiary has no obligation to declare this taxes until the end of 2024. The Ministry of Economy and Finance will issue a legal regulation on unused land tax, easing this tax exemption for implementation from 2025 as follows:

1/ Land subject to tax on unused land refers to land outside the property tax area.

2/ Land subject to the tax on unused land is allowed to be deducted 5 hectares per plot.

3/ For land in excess of 5 hectares, it can be exempted from tax on unused land in accordance with any of the following conditions:

- Agricultural land under cultivation with the confirmation of the committee or sub-committee to assess the land for unused land tax.

- Land serving the economic activities of a natural person or legal entity registered with the tax administration

- Land with or without construction under the lease agreement

- Land owned by the Royal Government or a Royal Government institution

- Economic land concessions leased from the state, community land

- Land owned by the state leased to a legal entity or a natural person for use in various economic activities under a contract or agreement between the two parties

- Land in a special economic zone that directly serves agricultural, industrial and service activities

- Land registered as the property of an enterprise in the field of education and vocational training for the purpose of employment in the field as mentioned above. In case the land is sold or not used for the above purpose, the tax obligation shall be in accordance with the law in force.

Definition

Capital gains tax is a tax on taxable income derived from the sale or transfer of capital of real estate in Cambodia and abroad to a resident natural persons and for capital in the Kingdom of Cambodia to natural persons and non-resident legal entities.

Obligee

A resident or non-resident taxpayer who has sold or transferred capital to another person and a non-resident taxpayer.

Tax rate, Tax base and Tax calculation

The tax is set at a fixed rate of 20%.

The tax base is capital gains, which are taxable income derived from the proceeds from the sale or transfer of capital, minus allowable expenses or costs of assets.

+ Tax calculation

Capital gains tax (real estate) is divided into two categories:

A. Unsaved Costs Deductions

Capital gain = sale or transfer price of real estate - (Sale or transfer price of real estate * 80%)

B. Saved Costs Deductions

Capital gain = sale or transfer price of real estate - (original price of real estate + total related expenses)

⇒ Tax payable = capital gain * 20%

Tax exemption

● Property owned by state institutions

● Property owned by foreign embassies and consulates, international organizations or government technical agencies

● The original residence of the taxpayer occupied for at least 5 years prior to the sale or transfer.

● Real estate within the relatives as stated in the provisions on stamp duty, except for the transfer of ownership or possession of real estate between siblings and siblings between parents-in-law and children-in-law and between grandparents-in-law and grandchildren-in-law.

★ Notice

According to the announcement of the Ministry of Economy and Finance, the implementation of the capital gains tax  of the six types of assets, including real estate, will be postponed until the end of 2024.

Definition

Tax on Property Rental is levied on the incomes derived from the lease of all types of real estate, such as buildings, houses, land, floating houses, etc.

Obligee

This tax is collected from the property owner. The owner must declare the tax within 15 days from the date of signing the lease.

Note: In case the tenant is a legal entity (enterprise) registered for tax in the self-declaration regime, this income is taxed and repaid according to the general withholding tax rate at the rate of 10% for residents and 14% for non-residents.

Tax rate, Tax base and Tax calculation

Tax on Property Rental is applied at the rate of 10%

The tax base is based on the total gross monthly rent (referring to the price set in the contract or the price agreed between the tenant and the owner)

A security deposit is not included in this gross rental fee.

+ Tax calculation

⇒ Tax to be paid = tax base * 10%

Tax exemption

● For the owners who declares the income included in the income tax under the self-declared regime

● The money that the tenant has deposited as collateral and when the contract end, the owner must return the full amount to the tenant.

● For those whose monthly salary is less than 500,000 Riel

● Real regime taxpayer (self-declaration)

In general, this article will only help you to consider the tax expense when there is a transaction to buy, sell or rent any property.

For more information, please visit the website of the General Department of Taxation https://www.tax.gov.kh/en or contact a professional officer.