Capital gains tax to come into force in January 2022

Capital gains tax to come into force in January 2022

A 20 percent tax on individuals who sell capital assets such as properties, leases and financial holdings will take effect from Jan 1 next year.

The announcement was made by the Department of Property and Real Estate Tax at Cambodia’s General Department of Taxation (GDT), which emphasised that this is not a new tax. Cambodian businesses have always paid capital gains tax (CGT) but from Jan 1 CGT will also apply to individuals, especially those selling land and properties.

A law to extend CGT to individuals was introduced by the Ministry of Economy and Finance in April last year and was supposed to take effect three months later. The government decided to delay the tax until January of this year because demand for real estate had been hit by the economic slowdown and the Coronavirus pandemic. When Coronavirus really took hold in Cambodia following the Feb 20 community incident this year the government delayed the tax by another year.

The GDT has been preparing additional draft guidelines to help taxpayers meet their CGT obligations.

According to the Prakas, or law, introduced on April 1 last year by the Ministry of Economy and Finance on Capital Gains Tax, the scope of capital gains applies to both resident and non-resident taxpayers at the rate of 20 percent of profits derived from the sale or transfer of six types of capital: immovable property or land, buildings and other constructions, leases, investment assets such as shares and bonds, goodwill, such as customers or brand names, intellectual property and foreign currency.

CGT is levied on capital gains achieved at the time of the sale or transfer of profitable capital. The seller has three months to pay. If there is no profit there is no obligation to pay the tax. Khmer Times