VLP Legal Press #9
Capital Gains Tax
What is Capital Gains Tax (CGT)?
It’s a tax on the profit (or "gain") made when you sell or transfer certain valuable items called "capital assets."
The gain is the difference between your selling price and your costs.
What are considered “capital assets”?
Land and buildings
Leases and sub-leases
Shares and bonds
Goodwill (e.g., brand name, customer list)
Intellectual property (e.g., patents, trademarks)
Foreign currency (non-Riel)
Are there any exemptions?
Yes, CGT does not apply to:
Agricultural land used by the owner
One “primary residence” owned for at least 5 years
Transfers by inheritance or donation (within close family, for shared property)
Government-owned or diplomatic properties
New share issuance/increase of share capital (not a sale)
Gains already taxed abroad (resident may just pay the difference)
Gains already taxed as “Tax on Income” (for businesses in Cambodia registered for VAT)
Who is subject to CGT?
Residents (individuals): Taxed on gains from assets inside or outside Cambodia.
Non-residents (individuals or entities): Taxed only on gains from Cambodian assets.
What if the asset is abroad?
Resident taxpayers must still report it
If you paid less tax abroad than in Cambodia, you pay only the difference in Cambodia
When does CGT apply (i.e., when is the gain considered "realized")?
For shares: At the earlier of:
When the Ministry of Commerce (MoC) recognizes the transfer
When the seller loses control of the shares
When full payment is received
For other assets:
Upon sale or legal transfer
Upon registration of ownership
By final court decision
What is the tax rate?
Flat 20% on capital gain (selling price minus deductible expenses)
What expenses can I deduct from the selling price?
For real estate, choose:
80% lump-sum deduction
Or actual expenses (e.g., legal fees, renovation)
For all other assets, only actual expenses apply
Note: Losses (if your costs are higher than selling price) cannot be refunded or carried forward
Who pays and declares CGT?
For shares, the company must withhold and pay CGT on behalf of the seller
For listed investments or foreign exchange trading, the payment agent does this
For other capital assets, individual seller (within 3 months after the gain is realized)
Where to file CGT?
For real estate in Phnom Penh: GDT
For other locations: Provincial tax office or GDT (on request)
What happens if CGT is not paid?
The transfer is invalid by law
Tax audits may be conducted
Penalties may apply
This is for general reference only and does not constitute legal advice. For further guidance, contact us at: