The General Department of Taxation has issued an Instruction on Tax Obligation For Members of the Board of Directors or Company Director.

In accordance with Article 42 of the Law on Taxation, promulgated by Royal code No. NS/RKM/0523/004 dated May 16, 2023, and Article 4 of ministry order [Prakas] No. 575 MEF.PK.GDT dated September 19, 2024, on Salary Tax, employment activities are defined based on the status under which individuals carry out their work under the direction of an employer. A natural person is considered an employee and is subject to salary tax if their employment status satisfies at least two of the following criteria:
– The individual has no risk of not receiving payment for their work, provided they come to work at the designated workplace and carry out tasks as specified in a general employment contract, whether oral or written.
– The individual is not able to determine the time and place for performing their work.
– The individual is not required to invest capital to purchase the tools or equipment used in performing their duties.
– The individual does not perform work activities for multiple employers simultaneously.

In accordance with Article 7 of ministry order [Prakas] No. 575 MEF.PK.GDT, dated September 19, 2024, on Salary Tax, taxable salary encompasses all income derived from employment activities, excluding fringe benefits. The monthly taxable salary is defined as follows:
• For resident employees, taxable salary includes Cambodian-sourced salary and foreign-sourced salary, as well as any advances, loans, or prepayments provided by the employer.
• For non-resident employees, taxable salary includes [only] Cambodian-sourced salary.

1- Salary Tax obligations of Board Members or Directors of Companies: Employee Criteria
Individuals serving as board members or directors of companies operating in Cambodia — including those temporarily assigned (secondment) by a parent company or head office abroad to perform the work in Cambodia— are subject to salary tax on any income received from such roles, regardless of whether they hold a work permit or not. This applies regardless of the location where the salary is paid.

2- Withholding Tax Obligations for Board Members or Directors of Companies: Non-Employee Criteria
If a board member or director does not meet the criteria of employment as outlined above and performs services on behalf of a non-resident individual—regardless of whether they possess a work permit—or if a resident or non-resident individual performs work independently for a company in Cambodia, such services are subject to withholding tax as stipulated in Articles 25 and 26 of the Law on Taxation.

Click here: https://t.me/c/1377322939/1202