6 types of corporations expanding into Cambodia

When foreign companies and foreigners expand into Cambodia, there are mainly six types: representative offices, branches, local corporations, partnerships, business cooperation contracts, and sole proprietors. In many cases, the form of a local corporation is selected, and under the Cambodian Investment Law, only the local corporation is covered by the Qualified Investment Project.

Representative Office in Cambodia

The representative office is based on the premise that the head office is located in the home country, and is a form for the purpose of business communication and information gathering with the parent company in the home country. The scope of business is limited, and general business activities that generate profits such as selling products and constructing buildings are not allowed. Therefore, value-added tax (VAT) and corporate tax are not subject to taxation, but personal income tax (payment tax), withholding tax, and annual business tax are subject to taxation on employees, and monthly tax filing is required.

locationRegistered an address in Cambodia with the Ministry of Commerce and the Directorate General of Taxation.
Representative office nameSame as the title of the parent company. Enter ‘Representative Office’ before the title.
Business contentLimited to market research, promotional activities, and liaison services. It cannot be the subject of all contracts, except for employment contracts, lease contracts, and utility bill contracts.
Tax obligationTaxable: Personal income tax (salary tax), withholding tax, annual business tax Not applicable: Value-added tax (VAT), corporate tax


The branch does not have an independent legal personality, and the assets and debts of the branch belong directly to the parent company in the home country. Unless prohibited by law against foreign companies, we can carry out a wide range of business activities as part of foreign companies, such as regular sales, manufacturing, processing and service provision, similar to Cambodia’s domestic corporations. It has the same tax liability as a Cambodian domestic corporation and can be closed at the discretion of the company. In the case of a branch office, there is no need to prepare the articles of incorporation and pay in capital, and there is no obligation to hold a board of directors.

locationRegistered an address in Cambodia with the Ministry of Commerce and the Directorate General of Taxation.
Branch nameSame as the title of the parent company. Put “Branch” in front of the title.
Business contentThe same rights and abilities as a domestic corporation are recognized.
Tax obligationWe have the same tax obligations as domestic corporations.

Local subsidiary

In principle, a local subsidiary in Cambodia becomes a “limited company” and is permitted to be established by a foreigner or a foreign company wholly owned by a foreign company. It can be established by one or more people by notifying the Ministry of Commerce of the Articles of Incorporation, and the company will become a public entity and acquire legal personality on the day of company registration.

titleIt is possible to set a unique title.
capital stockAt least 1,000 shares must be issued with a face value of 4,000 Riel or more per share. The minimum capital is 4,000,000 Riel (about 1,000 US $).
responsible areaIt is a limited liability, and the liability of shareholders is limited to the range of capital invested by each shareholder.
locationRegistered an address in Cambodia with the Ministry of Commerce and the Directorate General of Taxation.
company directorIn the case of a private limited company, it is necessary to appoint one or more directors, and in the case of a public limited company, it is necessary to appoint three or more directors. Directors must be natural persons, but there are no restrictions on nationality or place of residence. The law requires that the board of directors meet at least once every three months.
TaxableCorporate tax, withholding tax, personal income tax (salary tax), value added tax (VAT)

Partnership Company

Partnerships are a suitable form for professionals such as doctors, lawyers, and accountants. There are two types, a General Partnership with a concept similar to a partnership under Japanese company law, and a Limited Partnership with a concept similar to a partnership under Japanese company law, both of which have two or more persons. It is a contract to form a partnership for the purpose of earning profits. The contract can be oral or written and no legal documents are required. There are not many cases where it is used in practice.

Business Cooperation Contract

A business cooperation contract is a form of conducting a joint business with the Cambodian government or a public institution and receiving profit sharing instead of investing in the business. Instead of establishing a new corporation, we share profits from our business activities. Several cases of business cooperation contracts in Cambodia have been accepted.

Sole Proprietor

Cambodia is rare and even foreigners can register as a sole proprietor. You can register at the Ministry of Commerce without establishing a corporation. The procedure is simpler and the cost is lower than the establishment of a corporation, but it should be noted that the permitted businesses are limited to one business per company and there is a risk that the individual business operator will also be held liable.

AdvantagesMinimal required documents, quick and easy to set up. The sole proprietor can make all management decisions.
disadvantagesSince we have unlimited liability for business liabilities and responsibilities, we may lose the individual assets of the business if we cannot liquidate the business liabilities.

3 types of local subsidiary

There are roughly six types of expansion, but in most cases the establishment of a local subsidiary is selected. There are several types of local subsidiary, and when a foreign corporation or a foreigner establishes a local subsidiary in Cambodia, it is common to select the following “2. Private limited liability company”.  In addition, the minimum capital amount is 4 million riel (about 1,000 US dollars), but since the Ministry of Commerce recommends 5,000 US dollars or more, it is necessary to be careful about the discrepancy between the law and the actual operation.

  1. Public Limited Company
  • Shareholders are liable to the extent of their investment
  • No limit on the number of shareholders
  • 3 or more directors
  • Shares can be issued on the stock market

2. Private Limited Company

  • Shareholders are liable to the extent of their investment
  • There are restrictions on the transfer of issued shares
  • 2 to 30 shareholders
  • 1 or more directors
  • No stock issuance on the stock market

3. Single Member Limited Company

  • Only one shareholder
  • Others are the same as private limited companies.

There are three types of investment ratios in limited companies: 100% Cambodian capital, 100% foreign capital, and a joint venture between Cambodia and foreign capital. According to the Companies Act, 51% or more of foreign capital is a “foreign corporation” and less than 50% is a “domestic corporation” is defined. There is a difference in the scope of business, as only domestic corporations can acquire land and buy and sell some real estate.

Flow of establishing a local subsidiary

For private limited liability company

  1. Once you have decided to expand into Cambodia, decide on the location, form, trade name, business content, etc.
  2. Reserve a trade name (company name) in the Ministry of Commerce.
  3. Apply for commercial registration with the Ministry of Commerce.
  4. Authenticate with the General Taxation Bureau and register various taxes.
  5. Apply for the required license.
  6. Submit a business establishment declaration and employee employment application to the Ministry of Labor.

An example of an industry that requires the acquisition of an individual license

IndustrySupervising ministriesremarks
restaurantMinistry of TourismWith examination
Guest houseMinistry of TourismWith examination
HotelMinistry of TourismWith examination
Travel agencyMinistry of TourismDeposit required
Real estate service industryMinistry of Economy and FinancePolice certificate
Insurance broker businessMinistry of Economy and FinancePolice certificate
Customs clearanceGeneral Bureau of Customs and Consumption TaxNeed a customs clearance expert
Transportation industryMinistry of Public Works and TransportVehicle registration is also required
Clinic, hospitalMinistry of Public HealthRepresentative is Cambodian nationality required
A law officeLawyers AssociationRepresentative is Cambodian nationality required
Overseas dispatch businessMinistry of Labor and Vocational TrainingRepresentative is Cambodian nationality required  
Educational institutionMinistry of Education, Youth and SportsWith examination

Main tax system of local subsidiary

The Cambodian tax system requires monthly and annual tax returns. Local subsidiary are subject to corporate tax (business income tax and minimum tax), withholding tax, personal income tax (salary tax), and value-added tax (VAT). Cambodia has begun to conclude a bilateral double taxation prevention agreement (tax treaty). Not yet signed with Japan.

□For the following 4 items, you are obliged to calculate the monthly tax by the 20th of each month, submit the tax return, and pay the tax.

  • Corporate tax (payment of 1% of sales: minimum tax)
  • Withholding tax (payment of a fixed tax rate with payment of services, etc.)
  • Personal income tax (payroll tax) (income tax on salary)
  • Value-added tax (VAT): Standard tax rate 10%

□Annual corporate tax return must be submitted by March 31 of the following year. We will pay business income tax (annual corporate tax) and renew the patent certificate by March 31 every year.

Cambodian corporate tax pays 1% of monthly sales. It is called the minimum tax and is treated as a prepaid corporate tax. After paying the minimum tax, we will calculate the annual corporate tax after deducting expenses. The surface tax rate is 20%. At that time, if the total amount paid by the minimum tax is exceeded, the difference will be paid. If it is less than that, it will not be refunded and will be carried over to the next year.

Employment of employees

There are labor law provisions for hiring employees. There are regulations that are familiar in Japan, such as working hours of 8 hours a day, 48 hours a week or less, and work exceeding 6 days a week is not permitted.

In addition, a work permit and an employment card are required for foreigners to work. These are one card in Cambodia and must be issued by the company and will be fined if neglected.