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.

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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.

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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.

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In full: http://www.cambodiainvestment.gov.kh/investment-scheme/investment-incentives.html

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