2020 26 February

Cambodia Update: Relief Provided for Businesses Affected by COVID-19 and EBA


In response to the impact of COVID-19 and the partial withdrawal of EBA benefits – see our update here – the Cambodian government have issued a number of regulations which are intended to provide some relief to affected businesses in Cambodia. We outline these updates below:
Letter 1313 MEF – dated 25 February 2020

Notification no. 002 MEF dated 25 February 2020

Letter 1313 and Notification 002 issued by the Ministry of Economy and Finance provides a temporary tax break for tax registered enterprises operating in the tourism and garment/footwear and bag manufacturing sectors who may be affected by the outbreak of COVID-19 and the partial suspension of EBA tarrifs on certain exported goods from Cambodia.

Tourism Sector

Registered taxpayers in the Siem Reap province who carry out business activities relating to Hotels and Guesthouses will be exempted from the payment of all monthly taxes for the period of four (4) months from February 2020 to May 2020. Hotel and Guesthouse ​operators will still have the obligation to complete and submit their monthly tax returns and to continue to use the online system to manage their VAT (E-VAT) every month for the period of this exemption. In addition the taxpayers will still be required to file a annual Tax on Income return for 2019 to the GDT as usual.
We note that our interpretation of this tax exemption for four months is with respect to the actual payment of the monthly taxes to the General Department of Taxation and not the underlying obligation of the taxpayer to act as a withholding tax agent with respect to third party suppliers or employees. For example an employee on a gross salary contract would still receive their monthly salary net of tax on salary however the employer would not be required to pay that tax on salary to the GDT during the tax exemption period. Simiarly suppliers who enter into a contract that is inclusive of WHT would still receive consideration that is net of withholding tax but the withholding tax agent would not pay the withholding tax to the GDT during the tax exemption period. Affected taxpayers would still charge 10% VAT where applicable on their invoices and would still claim VAT input from registered suppliers however if during the tax exemption period they their VAT output was higher then their VAT input the difference would not be paid to the GDT.
In addition the Enterprise Audit Department of the General Department of Taxation will not subject registered taxpayers in the Siem Reap province who carry out Hotel and Guesthouse activities in Siem Reap to a Comprehensive tax Audit for the 2020 tax year.

For a tax registered entity carrying out Hotel or Guesthouse activities in both Phnom Penh and Siem Reap and which files consolidated tax returns at Phnom Penh how the exemptions listed above apply is a little unclear and we hope that the GDT will clarify this over the coming days.
Garments, Footwear, and Bags Sector
A tax exemption (tax holiday) for the period of 6 months to 1 year may be provided for those factories severely impacted from the lack of raw materials due to supply-chain issues caused by COVID-19 and/or the suspension of EBA.
The Ministry of Economy and Finance (MEF) will lead, coordinate, and prepare the method and policy for tax-exemption assessment.
We assume that the exemption in this case refers to Tax on Income however we await further confirmation from the MEF as indicated in the regulation.
Stamp Duty

The 4% Stamp Duty that applies on the transfer of immovable property in Cambodia will be exempted on the transfer of residential property that is valued equal to or at less then USD70,000 for the period from February 2020 to January 2021 provided the following criteria is met:

  • The transfer of ownership or right to possess of the property, having a value equal to or lower then USD 70,000  (based on market value and stated in a sale and purchase agreement) is effected from February 2020 to January 2021;
  • The transfer of ownership or right to possess of the immovable property must be from a developer that is registered with the MEF and Department of Economy and Finance; and
  • All developers must prepare a correct sale and purchase agreement for the property based on the market price. If necessary, the GDT can audit the developers to ensure that the selling price of the property is based on the market price.

Letter no. 1314 dated 25 February 2020
In order to support garment factories in Cambodia experiencing disruptions and delays in the supply of raw materials and in a effort to reduce logistic expenses, the MEF has instructed the General Department of Customs and Excise (GDCE) to implement the following:

  • The extension of products that qualify to use the green lane for the importation of raw materials of garments and accessories as well as for manufacturing components of investment projects to maximize custom procedures and custom clearance forms. To facitate a more efficient clearance process, the General Department of Custom and Excise can complete a more thorough inspection of the imported goods post clearance using post clearance audit mechanism.

(to clarify importers will have to use one of four lanes when importing goods into Cambodia – red, yellow, green and blue. For a importer using the green lane their Customs Declaration is automatically assessed and a clearance document is issued. The hardcopy declaration may be subject to Post-Clearance Audit (PCA).)

  • Cooperation with the Garment Manufacturers Association Cooperation (GMAC) to discuss with the Association of Forwarders and Custom Brokers to seek for solutions on the transparency of customs services that are charged to clients. In the event where there is strong evidence regarding inflated or fake Customs fees, there must be a legal measurement put in place.
  • In order to implement effectively on point 1, the GDCE will cooperate and compromise with the related parties such as International Autonomous-Port Authority and Carrier…etc. to ensure that this update can be implemented smoothly and consistently.  

Letter no. 1316 dated 25 February 2020
To support the Tourism Sector and attract foreign tourists to stay in Cambodia for longer period of time while the local tourism sector and Cambodia has been being impacted during the outbreak of COVID-19. The Government has decided to extend the period to visit Angkor for foreign tourists based on the categories of the tickets as the following:

  • One day tickets will now be extended to two days;
  • Three days tickets will now be extended to five days.
  • Seven days tickets will now be extended to ten days.

The above decision is valid for four (4) months from the date of the notification.


In addition, as the virus has the potential to trigger material adverse change, default and force majeure rights under commercial contracts (arising from the disruption to supply chains or the failure to fulfil contractual obligations), please do not hesitate to contact us if you require a review of your contracts to assess whether any suspension, review or termination rights arise. 

With respect to workforce planning, we can also assess the issues arising from any voluntary or imposed work reduction or redundancy schemes that may be needed to offset any adverse impacts to business operations or cash flows.  For such enquiries, please do not hesitate to contact us at cambodia@dfdl.com.

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.

DFDL Contact

Guillaume Massin

Partner & Cambodia Managing Director


Chris Robinson

Partner, Cambodia Deputy Managing Director & Head of the Cambodia Corporate and Commercial Practice 


Clint O’Connell
Partner & Head of the Cambodia Tax Practice



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