Cambodia: Guidance covering fiscal obligations for real estate leases, cessation of business, tax relief for airlines

The General Department of Taxation (GDT) has released guidance concerning the implementation of fiscal obligations for real estate leases, procedures for the cessation of business, and the reduction of withholding tax and specific tax for airline companies.

• Implementation of fiscal obligations for real estate leases: Instruction No. 33000 GDT (dated and effective September 18, 2024) clarifies the tax implications on lease transactions with a “lease-free period.” Key provisions include:
  • Withholding tax, value added tax (VAT), and tax on income (ToI) obligations are based on the lease agreement. The “lease-free period” must not exceed 10% of the total lease period.
  • If a lease agreement contains a lease-free period, the lessor must submit the lease agreement to the GDT within 30 days of signing.
  • Extensions for design, repair, renovation, or construction must be approved by the GDT.
• Procedures for cessation of business: Instruction No. 32775 GDT (dated September 17, 2024) outlines the steps for ending business in Cambodia:
  • Applications can be submitted online or via physical submission.
  • Required documents include a notification letter, application form (Form-103), and a tax payment receipt for stamp duty (~US$250).
  • Final tax declarations must be filed. Electronic filing accounts will be blocked, and tax certificates will be suspended.
  • A tax audit will be conducted for business cessation.
• Reduction of withholding tax and specific tax for airline companies: Instruction No. 009 GDT (dated June 7, 2024) reduces the tax burden on airlines leasing aircraft from foreign firms from June 1, 2024, to May 31, 2027, by:
  • Reducing withholding tax on aircraft leases from 14% to 10%
  • Reducing the specific tax on passenger air transport services from 10% to 5%

Read an October 2024 report prepared by the KPMG member firm in Cambodia