What is the Capital Gains Tax in Cambodia?The Capital Gains Tax (CGT) in Cambodia is a flat 20% rate from selling a capital asset. Contrary to what most people perceive. The Capital Gains Tax in Cambodia is not exactly new; businesses in the Kingdom have always paid capital gains. The material difference now is that it applies to individuals, especially those looking to sell immovable property a.k.a. real estate.The CGT was introduced into law through Prakas 346 from the Ministry of Economy and Finance back in April 2020 and was originally intended to be implemented a few months later in July 2020.Due to COVID-19, the law was delayed to January 2021 to reduce the pandemic’s impact on the real estate market. The implementation of the Capital Gains Tax in Cambodia was further delayed to January 2022 as the country saw its first major local community outbreak in Q1 2021. As of February 2022, the Capital Gains Tax has been delayed to 2024.Who has to pay Capital Gains Tax in Cambodia?Capital Gains Tax in Cambodia applies to both resident taxpayers and non-resident taxpayers. Taxpayers are obligated to pay their Capital Gains Tax within 3 months of realising their gains.Resident taxpayers are defined as physical persons who meet one or more of the Kingdom’s residential criteria.Non-resident taxpayers are defined as either legal entities or physical persons who are not considered residents.How is “Capital” defined in Capital Gains Tax?Capital Gains Tax covers capital gained from selling: Immovable Properties, Leases, Investment/Financial Assets, Good (Licenses & Branding), Intellectual Property, and Foreign Currency.That may sound all-encompassing, but much like other tax laws, there are exemptions to Capital Gains Tax, especially when it comes to immovable property a.k.a. Real estate:The principal residence of the taxpayer - in the event that the taxpayer (or their spouse) has more than one place of residence, only one of them can be exempted from the CGTTransfer of immovable properties between family members as stated in the regulations around Registration TaxAssets of the Cambodian governmentImmovable properties a.k.a. Real estate properties sold for public purposes based on Cambodia’s Expropriation LawsAssets of foreign embassies/consulatesAssets of international organizations or cooperation agencies of foreign governmentsHow is Capital Gains Tax calculated in Cambodia?Capital Gains Tax in Cambodia is a flat 20% rate on gains made after selling a capital asset. At face value, that is a significant portion of sales proceeds but there are 2 methods taxpayers can use that allow for a bit more consideration to their expenses:Actual Expense Deduction MethodThis method takes the sales proceeds and subtracts the expenses the seller made on that property to get the actual Capital Gains Tax to be paid. These deductibles can be the purchase cost, consulting fees, registration tax, commissions, and even advertising. These actual expenses are deducted from the sales proceeds and 20% of the difference will be the Capital Gains Tax to be paid.This method is beneficial for property sellers who spent a lot on overhead/operational costs and who might be looking at more humble margins.Example:Mrs. Phan is looking to sell her home for $250,000 that she originally bought for $100,000 a couple of years ago. She was diligent to keep essential documents detailing her expenses in the acquisition/renovation of her property, which is the following:Registration Tax: $4,000Loan interest: $3,000Loan administrative fee: $500Renovation: $35,000Now that we have the relevant values, let’s do a sample calculation: Actual Expenses Deduction MethodSale Price$250,000 Actual Expenses (Deductibles)Original Price$100,000Registration Tax$4,000Loan interest$3,000Loan administrative fee$500Renovation$35,000TOTAL EXPENSES$142,500 Capital Gains TaxSale Price$250,000Total Expenses$142,500Capital Gains (Sales Price - Total Expenses)$107,500Capital Gains Tax (20%)$21,500 Ms. Phan will have to pay $21,500 in Capital Gains Tax once she sells her property via the Actual Expenses Deduction Method.There are more applicable deductibles so we strongly suggest you keep tabs on the expenses you made for your property if you are planning to sell in the future.Determination Based Deduction MethodThis method takes 80% of the sales proceeds and subtracts it from the entire sales value. The result will be the Capital Gains and 20% of it will be the Capital Gains Tax to be paid. This method is highly beneficial for property owners who bought low and are planning to sell high.Example:Mrs. Phan is aware there’s another way of calculating Capital Gains Tax. And being a discerning homeowner, she explored the other method of getting the capital gains tax for her $100,000 property she plans to sell for $250,000.Determination Based Deduction MethodSale Price$250,00080% of Sale Price$200,000Capital Gain (Sale Price - 80%)$50,000  Capital Gains TaxCapital Gain$50,000Capital Gain Tax (20%)$10,000 Mrs. Phan will have to pay $10,000 in Capital Gains Tax once she sells her property via the Determination Based Deduction Method.It’s quite obvious which method Mrs. Phan will be using and that’s intended as taxpayers in Cambodia are free to choose which method of Capital Gains Tax calculation to use for their tax obligation. As mentioned above, the Capital Gains Tax is planned to finally be implemented in January 2022. This creates a third method of Capital Gains Tax: selling your property before January 2022 so you don’t have to pay this tax!Kidding aside, we highly recommend that you keep any relevant expenses related to your property and do your due diligence in finding the method that gives you the best tax rate.Looking to buy OR sell property? Click hereArticle by:

Like any other business enterprise, real estate development is governed by a legal framework. These set of laws and regulations, though complicated, ensure operations and activities related to the sector are done legally without ill effects on people and the environment.  Co-owned buildings are covered by most existing real estate laws in Cambodia but there are a few regulations exclusive to this type of property. Developers can be heavily penalised if they don’t follow these regulations in the Kingdom.We will guide you on the legal frameworks of co-owned buildings. Additionally, you will learn what is required if you are a developer in Cambodia.Keep in mind that you can browse hundreds of co-owned buildings on our site and you should always consult with a qualified legal team if you have doubts.What is a co-owned building?When people say “condominium” they are usually referring to a co-owned residential building. Under a co-ownership arrangement in Cambodia, several owners live in the same building. A co-owned building consists of units that are exclusively owned, with common areas whose use and benefits are shared among the co-owners.There are several types of co-owned buildings:Detached buildingsSemi-detached buildingsAttached housesIn the past, foreigners weren’t allowed to buy condos in Cambodia. In 2010, however, the law changed. Anything from the first floor and up can be owned by a foreigner. Also, foreigner ownership cannot exceed 70% in a single building.Find out more about buying a condo in Cambodia as a foreigner.Legal aspects for developers:Project licenceBefore work begins, a developer is required to obtain a project licence from the Ministry of Finance and Economy (MEF).This requirement was set forth in Prakas 965 and there are two types of licences:Type 1 licence is for developers who finance their projects by themselves. Type 2 license is issued to developers who raise money from their buyers.Holders of a Type 1 licence can only sell units within the development once the project is complete. Developers having a Type 2 licence can pre-sell, but only after obtaining a construction permit and a project permit from the MEF.Developers must make a deposit of 2% of the total value of the project into an account with the National Bank of Cambodia (NBC). This measure is meant to protect investors and their money in the event the project is not completed.The government has the right to revoke the licence if the developer fails to finish the project on time or if the developer fails to follow the legal obligations required under the law.Construction permitsSave for a few exemptions, a construction permit is required for any construction work or development in Cambodia.Applicants must complete forms and submit them to the Ministry of Land Management, Urban Planning and Construction (MLMUPC). Supporting documents must also be filed at the commune, district and municipal levels. All submissions must be made in Khmer.The application must bear the signature of the landowner and a licensed project designer or architect.The authority to issue construction permits mostly falls within the jurisdiction of municipal or provincial officials. For big projects like airports and seaports, it is the National Committee of Land Management, Urban Planning and Construction that issues the necessary permits.Under Cambodian law, a construction permit is only issued if the applicant follows or is compliant with the master plan, land use plan, and other governing rules and regulations.Other relevant permits in CambodiaIn addition to the permits mentioned above, there are others that will be required throughout the process of development:A site opening permit is required to open a building site. This is issued by the MLMUPC. The ground cannot be broken before obtaining this permit.A site closing permit is required once the construction is finished. This is a key component in the process. A certificate of compliance is also required before the project is considered finished. Keeping to codeIt’s important to follow the letter of the law when it comes to real estate in Cambodia. If problems occur, court cases can be long and painful affairs. It’s important to do all your research before beginning the process. Realestate.com.kh urges everyone to enlist the help of qualified legal professionals.Note: This is a general guide and does not constitute definitive legal advice. Always do your own research and invest at your own risk.Looking for property investments in Cambodia? Let us help!

The concept of a co-working office space has been around for quite some time and is finally increasing  in popularity in Cambodia to satisfy the country’s short-term rental space demand. Most of co-working spaces offered are foreign companies that have progressed tremendously in just a span of a few years. Those shared spaces have become very popular among individual or groups of entrepreneurs, startups, and small businesses. Co-working space is a new trend entailing a shared working environment, often similar to an office. Unlike in a typical office environment, these co-working spaces are usually not occupied by the same organization or company. There has been an increase in working space of this type both in Phnom Penh City and Siem Reap province. Some of the co-working spaces in Phnom Penh are Impact Hub Phnom Penh, Small world, Colap and a lot more. Meanwhile, Siem Reap has The 1961 Co-working & Art Space, and Angkor Hub.  Although co-working is still quite a new concept in Cambodia which begun in 2015, Olivia Hough, Chief Operations Officer (COO) at Impact Hub, stresses it has proven very popular for two years, saying: “we have expanded three times. It is likely to continue to grow as a trend as the startup scene continues to grow in Cambodia. We wanted to support and enable Cambodians to start their own social businesses.” Ms. Olivia explains Co-working is like an open plan office, with the difference that anyone can join. Our community at Impact Hub is made up of techies, creatives, NGO workers, entrepreneurs, freelancers, or writers, etc. It's very diverse, meaning you can work in a quiet environment with fast internet and like-minded people for a membership fee. It's also a great place to network and meet new people. Meanwhile, Mr. Ham Kimhoun, training director of Wecreate Cambodia, said: “Although new a  trend, co-working space is the office for everyone who is working long-distance, individuals, or small groups of people. Co-working office space offers a special and flexible environment as usually they include training, networking, referrals, and a venue for open discussions.” In fact, Co-working spaces in Cambodia are offering a good opportunity for Cambodians to meet people from different fields, allowing them to learn and exchange different business ideas.  Siem Reap, a multi-national melting pot, offers great opportunities for co-working spaces with a lot of encouragement and motivation. Mr. Loven Lamon, managing director of The 1961 Co-working and Art Space based in Siem Reap, said: “There is great potential for co-working office space in the Cambodian market. And Siem Reap comes second after Phnom Penh since it has many tourists, foreigners and young people in the area. with The 1961, members are also able to access more services and facilities such as meeting rooms, private skype rooms, and other wide range of rooms that can be used as needed.”  Mr. Loven added that The 1961 was converted in 2014 from a hotel to a co-working space. This was because they saw this growing trend, noticing many of business ideas from young people and didn’t have sufficient resource to rent an office space. Regarding rental price, Olivia said price for full-time membership is $60 a month, and part time (access to the space three times a week) $35. Members can also choose to have their own fixed desk with a locker for $150. For Mr. Loven, the price depends on the need of members: if a member needs to use the place for a day is $5, three-days $10, one week $20 and one month $100. This is the price for low season but it can go up during the high season. However, this price is still cheaper than working in their own office, or coffee shop, which won’t offer high internet speed and flexible environment. Co-working space is not a 100% real estate commitment, but it is a place where people can first prepare their business before they’re ready to occupy the actual office building for establishing the company. So, co-working space prepares the real estate market to accept actual business, according to Mr. Loven. Co-working spaces is not just a shared office, is more of a new community of like minded entrepreneurs and young business people. It offers a great opportunity to learn and grow connections. As the startup environment is not likely to stop any time soon, we can only foresee a further increase of co-working spaces.  Looking for office for rent in Cambodia? Find it on Realestate.com.kh!

Located at street 228 corner street 55, Sangkat Chaktomuk, Khan Duan Pen, Phnom Penh, the Lumiere Hotel is a lush and unique building among the crowd. The recently opened 4-star hotel, goes up to a total of 15 floors, offers a stunning sky bar at the roof top and a unique and modern design. Although this hotel was developed by a Singapore-based investor, it was designed and constructed by local Cambodian firms. SOMA Construction & Development Co., Ltd, is a local construction firm that performed as main contractor during the construction of the Lumiere Hotel from foundation, super-structure, MEP and finishing works. The construction work started in August of 2015 and was completed in January 2017.    For up to date news and information, visit our news section at Realestate.com.kh now!

Kicking off the 1st quarter of the year, the 2017 Real Estate & Construction Forum gathered property experts and enthusiasts from all over Cambodia and the world to achieve a common purpose. To advance in their knowledge of the industry. As such, speakers like Tom O’Sullivan – CEO of Realestate.com.kh – came out to talk about matters of grave importance. And one of those is the rapid growth and potential of Sihanoukville.Sihanoukville Investment prospects appear to be growing steadily in 2017. But what is so special about Sihanoukville and why should people start taking it seriously? Realestate.com.kh gives you the lowdown from Tom O’Sullivan himself.Why is everybody suddenly moving to Sihanoukville and considering Sihanoukville Investment?For one, O’Sullivan said that initial steps of the proposed master plan are already being completed. He mentioned that there’s actually a plan to conserve Sihanoukville’s natural resources and although this is giving difficulties for some businesses, ultimately it will benefit Sihanoukville. New developments and international names already include D’Seaview, Blue Bay, Royal Bayview, Sunshine Bay, Novotel, Marriott, Grand Mercure, Alila, and the Six Senses.Casinos are also making their way to Sihanoukville, granting multiple licenses to build and operate in this area. O’Sullivan mentioned that these developments build the confidence of investors and developers.He also added that infrastructures such as highways, roads, and port expansions are driving additional interest for other businesses because they not only aid travelers but connect other areas to Sihanoukville to either access its beaches or the SSEZ which employ thousands upon thousands of employees.Find out more about Sihanoukville Investment in our comprehensive location profile!Have these changes been visible to the consumers?In an attempt to look at the situation from another angle, O’Sullivan explains that Realestate.com.kh also conducted its own research to get a better understanding of the perceptions of the consumers.Around 5,000 people took part in the survey, which O’Sullivan says is a testament to the continued interest in properties in the country. The survey also showed that around 73% of the survey respondents are interested in buying in the next six months, and the majority estimates a budget of $50,000.With over a million people surfing the Realestate.com.kh site yearly, analytics have revealed that while Phnom Penh remains the most popular area for property seekers; However, taking 2nd place for the most searched area is Sihanoukville province.This is substantiated by inquiries from their customer base which O’Sullivan says grew to 25% in 2017, from 10% last year. He stated that most of those inquiries are from customers wishing to buy in Sihanoukville, especially for land. Most of these are Chinese investors. O’Sullivan quoted Juwai.com, a famous Chinese property portal, which suggests that 57% of Chinese consumers actually plan to purchase properties in countries in which they’re traveling to.So, will Sihanoukville overtake Phnom Penh?To realize the magnitude of the market slowly shifting towards the Sihanouk province, O’Sullivan first explains that the Phnom Penh market still enjoys a great property climate. In fact, the consumer sentiment survey shows that Phnom Penh is still the "first choice for those interested in purchasing a property" – leading at 65%, whereas Sihanoukville is at 2nd place with 15%.All in all, Sihanoukville has an attractive property market not because it’s safer for investment than in Phnom Penh. It is an attractive market because it is continuously building itself with its own character, with both a tourism and industrial focus, setting it apart from both Phnom Penh and Siem Reap. Thinking of investing in Sihanoukville? Look at the latest developments in Cambodia's premier resort town now!