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Investment Incentives in Cambodia

The Council for the Development of Cambodia (“CDC”) is a governmental agency set up to support and promote investment in certain areas by granting governmental incentives to specific investment projects (that is, investment incentives are applicable to a specific project, and not a company generally).  The Sub-Decree on the Implementation of the Amendment to the Law on Investment sets out the projects that are eligible for incentives. Some of the eligible projects include, without limitation:
 

  • hotels with a 3-star grade or above;
  • construction of modern markets or trade centers with an investment capital of USD 2,000,000  or more, of more than 10,000 square meters with adequate car parking;
  • production of animal feed with the investment capital of USD 200,000 or more;
  • production of garments, textiles, footwear and hats with an investment capital of USD 500,000 or more;
  • international trade exhibition centers and convention halls with an investment capital of USD 8,000,000 or more;
  • production of motor vehicles, parts and accessories, electrical and electronic appliances and office materials with an investment capital of USD 300,000 or more; and
  • production of food products and beverages, textile industry and garments with an investment capital of USD 500,000 or more.
 
Companies investing in these sectors may apply to the CDC in order for their projects to be approved and receive Qualified Investment Project (“QIP”) status. Projects with QIP status may receive certain investments incentives and guarantees.  The investment incentives include the following:
 
Profit Tax Exemption (maximum 9 years):
 
Profit taxes may be exempted for the “trigger period” plus three years plus any “priority period”.  The trigger period commences on the date of the final registration certificate issued by the CDC for the QIP and ends on the last day of the tax year immediately preceding the earlier of:
 
the first tax year in which profits were derived; and the third tax year after the tax year in which income was first derived.
 
The priority period is determined in accordance with the Financial Management Law.
 
Customs Duty Exemption:
 
Export orientated industry QIPs and relevant supporting industry QIPs may be exempt from import duty on production equipment, construction materials, raw materials, intermediate goods and accessories. While domestic supply orientated QIPs may be exempt from import duties on production equipment and construction materials only. 
 
The investment guarantees offered to QIPs include:
 
  • equal treatment of investors, regardless of nationality (except in relation to land ownership);
  • no nationalization which would adversely affect the investors’ properties;
  • no price control on investors’ products or services; and
  • the ability to remit foreign currencies abroad.
 
There are also incentives granted to projects in Special Economic Zones (“SEZ) as the Zone Developers and Zone Investors.