Cambodia Investment Review
As enterprises in Cambodia step into the financial year 2024, the culmination of the previous fiscal year marks a crucial time for compliance with various regulations and statutory requirements. This comprehensive guide outlines the critical annual compliance obligations that Cambodian enterprises must adhere to, ranging from labor compliance to tax and corporate responsibilities.
Labor Compliance Remains a Pivotal Aspect In 2024
Labor compliance remains a pivotal aspect, especially concerning foreign employees. Enterprises employing or intending to employ foreign nationals must apply for a foreign employee quota through the Ministry of Labour and Vocational Training’s (MLVT) online system. The application period typically spans from early September to 30th November for the subsequent year. Failure to adhere to this can attract fines up to KHR 18 million (approximately USD 4,500), and repeat offenses may lead to increased penalties and imprisonment terms, as stipulated by Joint Prakas 659 and Joint Prakas 326.
Read more: Explainer: Work Permits and Visa Requirements For Cambodia
The necessity of a valid work permit for foreign nationals cannot be overstated. These permits, valid for a year and expiring on 31st December, must be renewed by 31st March of the following year. The MLVT’s Guideline 517 clarifies the fines for non-compliance, with penalties reaching up to KHR 63 million (approximately USD 15,750) for significant violations.
Participation in the National Social Security Fund (NSSF) is mandatory for enterprises with employees, covering occupational risk and health care insurance, along with a pension scheme implemented since July 2022. Monthly contributions and employee reporting are due by the 15th and 20th of each month, respectively.
Enterprises must also address seniority pay for employees under Unspecified Duration Contracts, disbursing 15 days of wages and benefits biannually. Large employers have additional obligations, such as employing a percentage of qualified disabled persons and conducting apprentice training, with specific quotas based on employee count.
Taxation Requirements Remain Major Issue in 2024 and Beyond
The Tax on Income Return for 2023 is another significant obligation. Enterprises must electronically file their returns with the General Department of Taxation (GDT) by 31st March 2024. This includes a consolidated declaration for branches and a separate filing for entities with Qualified Investment Project (QIP) activities. Inclusion of a balance sheet, profit and loss account, and related party transactions is mandatory.
Compliance with local transfer pricing regulations is vital for enterprises with related party transactions. A separate local transfer pricing file for each tax year is required, with periodic updates on benchmark analyses.
The Patent Tax for 2024, based on enterprise classification, must be settled by 31st March. The fee varies, with a maximum of USD 1,250 for large taxpayers.
Submission of financial statements, both audited and unaudited, is governed by specific deadlines and must be done through the Accounting and Auditing Regulator’s e-filing system. Late submissions can attract fines between KHR 800,000 to KHR 2,000,000.
Enterprises are also reminded of the necessity to use the Khmer language in their accounting systems, unless approval from ACAR has been obtained, to avoid penalties.
New Law on Investment and Other Laws Come Into Effect
For QIPs, an application for a Certificate of Compliance with the Council for the Development of Cambodia is mandatory to maintain investment and tax incentives. The Annual Declaration of Commercial Enterprise must be submitted to the Ministry of Commerce within three months of the anniversary of the enterprise’s re-registration.
Read more: Updated Investment Law Aims To Increase Capital Inflows And Diversify Investments
Furthermore, amendments to the Law on Commercial Enterprises require all limited liability companies to appoint a corporate secretary who resides in Cambodia permanently. National domain names, a recent introduction, mandate companies to provide an email address with a level 2 national domain name when filing an ADCE.
In conclusion, the landscape of annual compliance in Cambodia for 2024 is intricate and layered with various statutory requirements. Enterprises are advised to diligently adhere to these obligations to avoid penalties and ensure smooth operational continuity. This guide serves as a comprehensive resource, enabling businesses to navigate the complex compliance terrain with ease and efficiency.
Disclaimer: The information provided is for informational purposes only and does not constitute legal advice. Consult with qualified legal counsel for specific situations.
This article is part of Cambodia Investment Review’s Explainer series. A collection of simple guides to everything you need to know about business and investment in Cambodia.
