Cambodia

Registrations and Establishing an Entity

A legal entity is required before hiring employees or processing payroll. Common entity types include:

• Representative Office (RO)
• Subsidiary
• Branch

Registration typically takes 4–6 weeks via the Ministry of Economy and Finance.

Banking

Employers must open a local bank account within 15 days of registration. While bank transfers are common for salary payments, many industries still rely on cash wages. Banks generally operate from 08:00 to 17:00 on weekdays.

Working Week

Standard working hours are Monday to Friday, 08:00–12:00 and 13:00–17:00. Overtime must not exceed 2 hours per day. Employees are entitled to one day off per week, typically Sunday.

Employment Law

Holiday Accrual
Employees are entitled to 18 days of annual leave, with an additional day for every three years of service. Leave can be used after completing one year, though most companies allow earlier use.

Maternity Leave
Maternity leave is up to 90 days post-birth. Employers are required to pay at least 50% of the employee’s salary during this period.

Paternity Leave
No statutory paternity leave exists; provision is discretionary and set by the employer.

Sick Leave
Employees may take paid sick leave. In practice, employers typically cover absence under annual leave entitlements unless a separate sick leave policy exists.

National Service
There is no requirement for compulsory military service in Cambodia.

Tax & Social Security

The tax year runs from 1 January to 31 December.

Income Tax (Tax on Salary)
Withholding tax is applied at the source. The progressive rates are:

• 0 – KHR 1,500,000: 0%
• KHR 1,500,001 – 2,000,000: 5%
• KHR 2,000,001 – 8,500,000: 10%
• KHR 8,500,001 – 12,500,000: 15%
• Over KHR 12,500,000: 20%

KHR 150,000/month may be deducted per dependent. Payments are due by the 20th of the following month (manual filing) or 25th (e-filing).

Social Security Contributions

Monthly NSSF reports and payments are due by the 15th of the following month.

Payroll

Employees must be paid twice monthly: once in the first two weeks, and again at the end of the month. Payslips must be issued monthly, and digital copies are legally acceptable.

Reports

Payroll records must be maintained for at least ten years. Monthly filings must be submitted to the General Department of Taxation (GDT) and NSSF.

Payslip Example

(Local language example not included in source)

Reporting

Employers must file monthly returns covering salaries, social contributions, and tax withholdings. Late submissions are subject to penalties.

New Employees

Employees must be registered with the Ministry of Labour and Vocational Training (MLVT). Employers must assist in workbook application or transfer and obtain a signed and stamped entry in the workbook within seven days of start date.

Leavers

Final pay is usually made before the regular payday. The employer must notify the MLVT during the month following termination.

Employee Benefits

Benefits such as housing or insurance may be offered but are subject to a 20% Fringe Benefits Tax. The tax applies to any benefit not included in the employee’s taxable salary.

Expenses

Business expenses are typically reimbursed outside of payroll and not taxed, provided they are supported by valid receipts and documentation.

Foreign workers require a valid business visa and work permit. The company must first apply for a foreign employee quota (normally 1 foreigner per 10 Cambodian employees). Exceptions may be granted based on technical expertise.

Once the quota is approved:

• The employee enters with an E-type business visa
• The visa is extended to six months
• The employer applies for a Work Permit
• Once issued, the business visa can be extended to 12 months
  
  

This process must be repeated annually.

USD is widely used for payroll despite the local currency being KHR. Payroll contributions and salary calculations may be made in USD, but official reporting is typically in Riel. Employers should plan accordingly for exchange rates and rounding.

Further Information

For more information, or assistance with Cambodia Tax inquiries please contact: gi@activpayroll.com

About This Payroll and Tax Overview

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.