11 January 2021

2020 was a difficult year for many businesses, especially the garment, textiles, footwear, and tourism sectors. In response to this, the Royal Government of Cambodia (“RGC”) has announced several measures in a press release dated 23 December 2020 to further assist the continuity of businesses impacted by the COVID-19 pandemic. Below is a summary of the measures announced:

Measures to continue assisting Garment, Footwear, Travel Goods, Bag, and Tourism Sectors

  • Employees in the Garment, Footwear, Travel Goods, and Bag sectors suspended from employment will be entitled to USD 70 per month (USD 40 from RGC and USD 30 from the employer) for the 1st Quarter of 2021 (“Q1 2021”);
  • Employees in the Tourism sector suspended from employment will be entitled to USD 40 per month from RGC for Q1 2021;
  • Tourism enterprises registered with the General Department of Taxation (“GDT”) and operating in Phnom Penh, Siem Reap, Sihanoukville, Kompot, Bavet, and Poi Pet will be eligible for exemption on all taxes for Q1 2021 but will need to continue filing monthly tax declarations. In this regard these enterprises shall declare income tax for the year 2020 at latest by the end of March 2021. It is worth noting that, in a subsequent instruction issued by the Ministry of Economy and Finance on 4 January 2021, the Ministry elaborates that such enterprises are exempted from the following taxes: Value Added Tax, Prepayment of Income Tax, Tax on Salary, Tax on Fringe Benefits, Withholding Tax, Specific Tax on Certain Merchandises and Services, Public Lighting Tax, and Accommodation Tax;
  • payment of pension scheme will be delayed for a further six months (from Jan. to Jul. 2021);
  • During the period in which businesses are suspended, such businesses shall be exempted from paying the contribution on social security schemes for occupational risk and healthcare;
  • Travel agencies and other tourism operators will be exempted from paying patent tax and stamp duty.

Measures to continue assisting aviation sector

  • Aviation businesses registered in Cambodia will be exempt from paying the minimum tax for Q1 2021.
  • The repayment of outstanding civil aviation fees will be delayed for a further three months ending March 2021 and aviation businesses will be allowed to repay these fees in installments.

Measure to assist factories, enterprises, and businesses

  • The payment of pre-2019 seniority indemnity, and seniority indemnity payments for the years 2020 and 2021 in all sectors shall be delayed to the year 2022. However, when the situation gets better, the government will consult with the private sector on the procedures for settling the seniority indemnity payments.

Measures to support growth

  • Purchase of houses in Q1 2021 from a project by a housing development company registered with the Ministry of Economy and Finance (“MEF”) and with a value of or less than USD70,000 shall be exempt from stamp duty tax.
  • The RGC further urges all housing development companies to reduce housing prices to the best of their capabilities.
  • The rate of the withholding tax on loans provided by domestic, foreign banks and microfinance institutions (regardless of whether the loans are from countries which have entered into a double taxation agreement (“DTA”) with Cambodia) will be reduced:

For new loans:

    • the rate of withholding tax on loans for the year 2021 will be reduced to 5%
    • the rate on withholding tax will return to 10% in the year 2022;
    • the RGC will then review and modify the rate of withholding tax back to the normal limit (15%) in the year 2023;

For existing loans provided:

    • the rate of withholding tax for the year 2021 will be reduced to 10%
    • the RGC will review and modify the rate of withholding tax back to the normal limit (15%) in the year 2022;

The RGC will continue the implementation of its cash assistance programs to poor and vulnerable families for a further three months for Q1 2021.


We hope this update is helpful to you. If you need any assistance or require further information, please feel free to contact Matthew Rendall of SokSiphana&associates (a member of ZICO Law).

This alert is for general information only and is not a substitute for legal advice.