A. Update

The Royal Government of Cambodia has issued Sub-Decree no. 196 amending the monthly tax on salary thresholds for resident employee as below effective from January 01, 2023

B. Statutory Compliance Release Date: September 28, 2022

C. Effective Date: January 01,2023

A. Update

Further to earlier update released, the Ministry of Labour and Vocational Training (MLVT) has issued an official joint Prakas no. 168/22, 169/22 and 170/22 dated July 05, 2022, providing detailed guidelines on the registration, payment and reporting procedures for pension contribution. The significant points for consideration on payroll are as follows:

Registration:

• Based on the Prakas 168/22 all existing employers who have not been registered with NSSF shall have an obligation to register not later than 30 days after this Prakas takes effect i.e., July 01,2022.
• For new employers who are established after this Prakas takes effect, shall register with NSSF no later than 30 days after the date of opening of enterprise/establishment.
• Employers already registered with NSSF on occupational risks and health care are not required to re-register their enterprise/establishment.
• Employers also have an obligation to register their workers/employees with NSSF not later than 3 days from the date of employment except those who have already had NSSF membership card.

After registration the NSSF will issue a Registration Certificate along with identity number for the enterprise/establishment. In case of closure, suspension, reopening, relocation, or enterprise/establishment or change of legal status of the employer notification should be made to NSSF not later than 30 days before initiation of such action.

Contribution payment:

Based on Prakas no. 170/22 both employee and employer shall contribute to pension schemes compulsorily or voluntarily as may be applicable. Earlier the date to start contribution payment was also made effective from July 1, 2022 but has been postponed to the month of October 2022.

Employers shall collect and pay the contribution on their part and employees’ part to the NSSF account in any bank by 15 th of the following month. If the employer wishes to pay annually then an application shall be made to the NSSF. This annual contribution shall be paid as per calendar year and made in the following month from the date of the month applying for this contribution payment.

Reporting:

Employers shall submit the following documents directly or through e-mail to NSSF not later than 20 th of the following month.

• Form 1.04 Social Security Scheme Contribution Payment Declaration Letter
• Receipt of paying contribution at the bank
• Report on number of workers/employees (Form 1.03 or Electronic Form)
• Payroll or other necessary documents

Employers opting for annual payment shall provide the following report to the NSSF as a requirement:

• If there is no movement of personnel, the employer shall report every 12 months.
• If there is movement of personnel, the employer shall report every 15 days from the date of change.

Voluntary Contribution:

Employers are not obliged to pay their part of contribution for 60 years or older employees as on July 01, 2022. Instead, employees themselves can apply for a voluntary contribution to receive elderly’s old age pension. This application shall be made within 12 months from the effective date of the Prakas.

B. Statutory Compliance Release Date: July 05, 2022

C. Effective Date: July 01,2022 and October 01, 2022 as applicable below.

A. Update

The Royal Government of Cambodia (RGC) issued on March 04, 2021 Sub-Decree No. 32 introducing a pension fund scheme with the National social security fund (NSSF).

All employers with at least one or more employees were required to register for the pension fund scheme with the NSSF within 30 days following the effective date of Sub-Decree No. 32, i.e., by April 04, 2021. However, this requirement does not apply to employers that have already registered with the NSSF for the occupational risk and health care fund scheme. Employers also must register an employee within three days following the start of employment if the employee has not yet registered as a member with the NSSF.

Employers are required, on monthly basis, to remit the joint pension contributions i.e., both the employer and employee portions mentioned below to the NSSF by 15^th of the following month and provide a report to the NSSF detailing the number of workers and employees by 20^th of the following month.

First phase: For the first five years, the contribution rate will be 4% of the contributory wage i.e., 2% contributed by the employee and another 2% contributed by the employer.

Second phase: For the next five years, the contribution rate will be 8% of the contributory wage.

Third phase: The contribution will increase by 2.75% of the contributory wage for the next 10 years and further increase by another 2.75% in the subsequent 10-year period

The term “contributory wage” refers to the wage, before tax, that is used to calculate pension contributions.

The Ministry of Labour and Vocational Training (MLVT) has issued an official joint Prakas no. 165/22 K.B/Pr.K.B.S.S dated June 28, 2022 insisting on the effective date of the scheme.

B. Statutory Compliance Release Date: March 04, 2021

C. Effective Date: July 01, 2022

A. Update

The new Tax on Salary (‘TOS’) Prakas no. 543 (‘Prakas’) was issued to replace and supersede Prakas no. 1173 that had been in effect since 2003. In principle, the law remains the same except for few changes brought in to provide clear perception of the regulations related to tax on salary. The main highlights of the changes in this Prakas are as follows:

1. Key definitions (Article 3 and 7 of Prakas)

In Article 3 of the Prakas, definition of different terms has been inserted, like salary, employer, employee, resident, Non-resident, salary from Cambodian sources, salary from foreign sources and international organization.

In article 7 of the Prakas information on taxable salary of both resident and non-resident employees has been inserted. Please refer to the source document for detailed information.

2. Fringe Benefits (Article 15 of Prakas)

The benefits that employer provides directly or through third party to physical person should be liable to tax on fringe benefits. As per the Prakas, provision of any part of shares or company capital has been included as Fringe benefits.

3. Foreign tax credits (Article 19 of Prakas)

As per the Prakas, a resident natural person is eligible for a tax credit on the taxes paid on salary from foreign sources only if, such person has complied with the formalities and presented documents confirming the payment in foreign country, especially certification from the foreign payer of tax on salary and the foreign tax administration.

B. Statutory Compliance Release Date: September 08, 2021

C. Effective Date: September 08, 2021

A. Update

Under the Circular No.003 MEF.GDT dated April 11, 2019 (Circular No.003), any seniority payments to Cambodian employees are exempt from TOS. But the seniority payments to expatriate employees are subject to TOS.

Recently, the Ministry of Economy and Finance (MEF) issued another Circular No.002 MEF.GDT dated March 24, 2020 (Circular No.002) on TOS Exemption on the 2020 Seniority Payment, which is summarized as follows-

1. The seniority payments for the years prior 2019 and 2019 are still covered under the Circular No.003.

2. The seniority payments from 2020 onward that don’t exceed KHR 4,000,000 (of USD1,000) is exempt from TOS. But the portion of the seniority payments that exceeds KHR 4,000,000 per annum is subject to TOS. If the seniority payments are made twice per annum, the TOS should be calculated as follows-

• - First payment: Taxpayers shall deduct KHR 2,000,000 from the total entitled seniority payment. Then, include the remaining seniority payment amount in the monthly salary base for TOS calculation purposes at the time of the payment.
• - Second payment: Follow the same approach under the first payment.

3. The seniority payments shall be allowed for a deduction for Tax on Income (TOI) purposes when the amount is paid.

Notification no. 018/20 MOLVT.S.Ch.N.Kh.L dated June 02, 2020 on the Postpone of Back Payment of Seniority Indemnity Prior to 2019 and New Seniority Indemnity in 2020 until 2021.

B. Statutory Compliance Release Date: March 24, 2020

C. Effective Date: June 30, 2021

A. Update

1. The Ministry of Labour and Vocational Training has issued the letter to respond the Cambodian Federation of Employers and Business Associations (CAMFEBA) that the annual leave for workers who work less than 21 days per month shall be determined by prorated calculation.

2. Special leave shall be granted during the event directly affecting the worker's immediate family. If the worker has not yet taken his annual leave, the employer can deduct the special leave from the worker's annual leave. The replacement work shall be made within the workdays and shall not be more than 10 hours per day or 54 hours per week. The replacement can be made up to 6 hours a week and entitled to normal hourly rate. In the event that the employees/workers work more than 54 hours per week, employer shall provide them the overtime wage as determined by Labor Law.

B. Statutory Compliance Release Date: March 30, 2020

C. Effective Date: February 21, 2020

A. Update

The Royal Government of Cambodia has released a new sub-decree on a new taxable monthly salary for resident employees. The new progressive tax rate for resident employees is as follows:

^* Assumption: 1USD =KHR4,000

B. Statutory Compliance Release Date: February 19, 2020

C. Effective Date: February 13, 2020