Tax on Capital Gain Under Cambodian Taxation Law

November 20, 2025

INSIGHTS

Introduction

Capital gains have become a growing focus for businesses and individual taxpayers in Cambodia as economic activities expand and the transfer of assets becomes more common. Understanding how capital gains are taxed is essential for ensuring compliance and planning transactions efficiently. This newsletter intends to provide an overview of the current rules governing Tax on Capital Gain under Cambodian taxation law, highlighting key provisions and practical considerations.

‍

Key Provisions

1. Regulatory Framework

The Tax on Capital Gain is governed by the Law on Taxation and relevant Prakas issued by the General Department of Taxation (GDT) under the Ministry of Economy and Finance (MEF). The MEF issued Prakas No. 496 on Tax on Capital Gain on July 18, 2025, specifying further details on scope of the law, tax rate, tax exemptions as well as tax calculation. However, on October 30, 2025, the GDT issued a Notification No. 34236 to postpone the implementation of Prakas No. 496 until January 1, 2026. Before proceeding, the following section will detail the definition of capital gain, applicability to taxpayers, tax rate, tax exemptions, and deductible expenses.

‍

2. Definition of Capital Gain

"Capital Gain" refers to the positive difference between the selling price or transfer value of a capital asset and its acquisition cost, after deducting allowable expenses. Capital refers to 6 (six) categories of assets: real estate, leases, investment properties, business goodwill, intellectual property, and foreign currency.

‍

3. Scope and Tax Rate of Capital Gain

Tax on Capital Gain applies to resident taxpayers who are natural persons realizie capital gains from the sale or transfer of capital located both within and outside the Kingdom of Cambodia, as well as to non-resident taxpayers who realize capital gains from the sale or transfer of capital located within the Kingdom of Cambodia. Under Prakas No. 496, the standard capital gains tax rate is 20% (twenty percent) of the taxable capital gain.

‍

4. Taxpayers subject to capital gains tax when:

They sell, transfer, or otherwise create a right over property; or
They register the transfer of ownership or possession of property with the competent authority; or
Ownership or possession of property is transferred by a final court judgment or order.

For equity assets, capital gain is realized at the earliest of the following points:

The Ministry of Commerce recognizes the share transfer;
The seller or transferor loses control rights over the shares;
The full payment for the sold or transferred shares has been received.

‍

5. Tax Exceptions

Capital gains tax is exempted from the sale or transfer of the following:

Agricultural land owned or occupied by citizens and actually used for producing crops. A permit or certificate of agricultural land use from the local authority or tax administration must be attached.
The taxpayer's principal residence that has been occupied for at least 5 (five) years before the sale or transfer. If a taxpayer has more than one residence, or the taxpayer and spouse have different residences, only one residence is allowed as the principal residence.
Real estate transferred within the family circle through succession between:

Biological parents and biological children;
Husband and wife;
Biological grandparents and biological grandchildren;
Parents and biological children and children-in-law (spouses of the biological children), to be joint property;
Grandparents and biological grandchildren and children-in-law (spouses of the biological grandchildren), to be joint property.

Real estate transferred within the circle of relatives through the first donation between the same categories of family members listed under Item C.
Property owned by state institutions.
Property belonging to foreign diplomatic or consular missions, international organizations, or technical cooperation agencies of other governments.
Property for public benefit in accordance with the Law on Expropriation

‍

6. Conclusion

Capital gains taxation is becoming increasingly significant as Cambodia’s economic activity grows and asset transactions become more frequent. A sound understanding of the applicable rules, ranging from the legal framework and taxable events to exemptions and calculation methods, is essential for ensuring full compliance and effective tax planning. Prakas No. 496 on Tax on Capital Gain on July 18, 2025, provides comprehensive guidance on the application of the Tax on Capital Gain; however, its implementation has been deferred to January 1, 2026, giving taxpayers additional time to prepare. As these regulations take effect, both resident and non-resident taxpayers should carefully assess the tax implications of any asset transfer and maintain proper documentation. Staying informed and proactive will help taxpayers manage their obligations responsibly and avoid unnecessary risks as Cambodia strengthens its capital gains tax regime.

‍

At ILAW CAMBODIA, our tax and legal specialists are ready to guide you through every step—providing practical advice, compliance support, and tailored tax planning strategies designed to protect your interests. Staying informed and proactive is the key to managing obligations responsibly as Cambodia strengthens and modernizes its capital gains tax framework.

‍