The Ministry of Economy and Finance has issued a Prakas on the tax obligations of businesses engaged in the international transportation of goods via waterways.
Prakas No. 405, dated 21 May 2025, on the implementation of tax obligations for resident and non-resident taxpayers operating in the international waterway transport sector, the measure is introduced to promote tax transparency and ensure fair and consistent treatment for all relevant taxpayers.
Under the Prakas, resident taxpayers those with a permanent presence in Cambodia are subject to tax on their worldwide income. Non-resident taxpayers, such as foreign shipping lines without a permanent establishment in Cambodia, are only taxed on income earned within Cambodia. These non-resident businesses follow a simplified tax regime that applies a deemed profit margin of 15%, taxed at the standard 20% rate resulting in an effective tax rate of 3% on gross income from Cambodian sources.
The Prakas provides detailed guidance to ensure transparency and proper tax treatment of disbursements and reimbursements. Disbursements made on behalf of clients, where invoices are issued in the client’s name, are neither treated as taxable income nor allowable deductions. In contrast, reimbursements involving expenses incurred and later recovered by the enterprise are considered taxable income and may include a reasonable profit margin.
For Value Added Tax (VAT), international transportation of goods is taxed at 0%, while related services performed within Cambodia such as local handling, documentation, and inland transport are subject to the standard 10% VAT rate. In addition, resident taxpayers must make monthly prepayments equal to 1% of turnover, while this requirement does not apply to non-resident taxpayers operating under the simplified 3% tax regime.
All taxpayers must comply with Cambodia’s self-assessment tax system. In cases where a Double Taxation Agreement (DTA) exists between Cambodia and another country, the provisions of the DTA will override any conflicting rules in the Prakas.
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