Being a property owner, seller or buyer in Cambodia you will need some reasonable knowledge to help you understand your obligations and respond accordingly. For those who sell or lease real estate and other properties, it is important to know the property tax basics in order to make informed decisions. The same applies to buyers or investors, who should have a working knowledge of laws and regulations governing property transfer, sale, lease, etc., to make sound decisions.
What is Property Tax?
This tax is paid annually for immovable properties (land, apartment, etc.) and needs to be filed and paid by September 30th. The first step is to register at the tax branch where the property is located and complete the PT01 and PT02 forms. PT01 provides information about the property. PT02 is the tax application form. When registering, take original documentation attesting to your identification property ownership (e.g. birth certificate, passport, certificate of ownership). Property Tax is 0.1% of the property value, determined by the Immovable Property Assessment Committee. Calculation is based on several factors including location, materials and government data. Owners pay this tax if the value of property is >$25,000 US and is now strictly enforced. Agricultural land, state land, and industrial locations are exempted.
Things you need to know about the Transfer Tax
Buyers are responsible for paying this tax which is also known as stamp duty. It is payable on completion of a sales transaction. This tax is calculated as 4% of the property value. The actual tax levied is computed through government valuation or actual transaction price. In practice, the two valuation methods are often not applied, relying instead on the negotiated price between buyers and sellers.
Where does the Withholding Tax apply?
This tax applies to property rentals. Businesses, for example, renting office space, must pay 10% Withholding Tax on the rent. The landlord is responsible for withholding this and the lessee acts as the withholding agent and pays the obligation on his tax return. When buying condos, you must pay 10% VAT, except for the land where the property stands. The same applies if the lessor is a registered taxpayer. If the lessee is a registered taxpayer, a 10% Withholding Tax is deducted.
Who Pays Rental Tax/Income Tax?
Locals and foreigners who own and rent out properties must pay Rental / Income Tax annually. A foreign investor who buys property and rents it out pays 14% of the gross rate. For locals, the rate is 10%. If you want more reliable information regarding taxation, we recommend you obtain independent legal or professional advice to ensure certainty and clarity.
For more information go to: www.realestate.com.kh/news/Cambodia-Property-Taxes-Important-tips-for-buyers-and-renters/