2020 16 March

Cambodia Tax Alert: Education Sector Receives Tax Incentives


The Ministry of Economy and Finance issued Prakas 209 on the 2nd of March 2020 extending the tax incentives for educational establishments that were first introduced in 2016 under Prakas 904 – see our update here

As with Prakas 904 the objective of Prakas 209 is to provide tax incentives for the education sector, to support human resource development by encouraging qualifications and to reduce the expenses of parents and guardians of students.

The tax incentives provided under Prakas 209 encompass Tax on Income (“TOI”), Minimum Tax (“MT”), Prepayment of Tax on Income (“PTOI”), Withholding Tax (“WHT”) and Value Added Tax (“VAT”). “Educational establishments” in the Prakas refers to public and private educational establishments which provide pure educational services from kindergarten to higher education, as well as technical and vocational training establishments.

The tax incentives provided to all educational establishments under Prakas 209 include:

  • The suspension of payment of the annual 1% MT, calculated on annual turnover, until the end of 2023;
  • The suspension of payment of the monthly 1% PTOI, calculated on monthly turnover, until the end of 2023;
  • The grant of scholarship(s) (i.e. free of charge or discounted school fees) will not be included as taxable revenue for TOI calculation purposes;
  • A 15% WHT exemption on interest payments to resident lenders and payments made in cash or in kind with respect to management or consultation services or similar services which are directly connected to the education of students;
  • A 14% WHT exemption on interest payments to non-residents and the payment of management and technical services which are directly connected to the education of students, and dividends to non-residents;
  • Educational services and other supplies of goods and services that have a nexus with the education services being performed, including catering and accommodation provided to students, are considered as non-taxable supplies for VAT purposes (i.e. not subject to 10% VAT). VAT input paid by educational establishments with respect to non-taxable supplies may not be creditable, but are a deductible expense for TOI purposes.

Educational establishments are still subject to the following taxes and obligations:

  • The payment of 20% TOI if the educational establishment has annual taxable income;
  • Collecting and remitting resident WHT on payments to residents who are not self-assesment taxpayers with respect to rent of movable or immovable property (noting that under Prakas 1098 issued on the 29th of January 2020 that WHT is not exempted from lease payments to tax registered lessors), royalty, and services including construction, engineering, architecture and other services which are not directly connected to education of students;
  • Collecting and remitting non-resident WHT on payments of, royalty, rent, and any incomes connected to use of property;
  • Collecting and remitting Tax on Salary and Fringe Benefit Tax;
  • Other applicable taxes based on the tax regulations;
  • Registering with the tax administration;
  • Submitting monthly and annual tax returns to the tax administration and paying taxes on a timely basis;
  • Keeping proper accounting documents based on the applicable regulations;
  • Submitting audited financial statements, which have been audited by an independent auditor, to the tax administration for educational establishments which have annual turnover from KHR 4,000 million (approx. USD 1,000,000).

The DFDL tax team as always stand ready to answer any questions that you may have on this and other tax issues of concern.

Tax services required to be undertaken by a licensed tax agent in Cambodia are provided by Mekong Tax Services Co., Ltd, a member of DFDL and licensed as a Cambodian tax agent under license number – TA201701018.
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.


Clint O’Connell

Partner & Head of the Cambodia Tax Practice


Borapyn Py

Partner & Deputy Head of Cambodia Tax Practice


Vajiravann Chamnan

Senior Tax Manager 


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