Are you interested in renting, buying, or selling a property in Cambodia?
The property market plays a significant role in any country’s economy. In fact, the efficiency of any country’s economy can be determined from its property market performance.
If you want to invest in the real estate market, it is advisable to invest in a country with good historical performance. When it comes to real estate, Cambodia takes the top position. The country has passed major economic downtimes successfully and its economy is doing great.
So, if you are planning to invest your money in real estate Cambodia, this post is for you. In this post, we will talk about tax laws of Cambodia property. This will give you a better idea about whether it would be wise to invest in Cambodia or not.
When planning to purchase property in Cambodia, understanding the tax laws is very important. This is important especially for foreigners. There are different criteria set for property buying, selling, and renting in Cambodia. Over time, there have been different changes implemented in the property tax laws of the country.
Registration Tax
Registration tax is also known as transfer tax. This tax is imposed on transfer of ownership of the property. In Cambodia, the registration tax or transfer tax is 4%. The property buyer needs to pay 4% stamp tax. In reality, this tax is paid commonly by the seller.
Patent Tax
Another important type of tax in Cambodian property tax law is patent tax. This tax is specifically to business owners of three categories – small taxpayers, medium taxpayers, and large taxpayers.
Small taxpayers are the ones with annual income from 250 million riel ($62,500) to 700 million riel ($175,000). Medium taxpayers are sub-national government institutions, associations, and non-governmental organizations with turnover from $175,000 to $500,000. Large taxpayers are the ones with annual turnover of more than $500,000.
Cambodia Property Tax
The term property means land, house, building and other construction built on the land. Property tax is also known as TOIP or Tax on Immovable Properties. In Cambodia, the property tax is not imposed for properties valuing less than 100 million Riels ($25,000).
Another important thing you need to keep in mind about Cambodia’s property tax law is that the value of the property is determined based on the market price by the property evaluation committee established by the Prakas of the Minister of Economy and Finance. Talking about property tax, it is collected on a yearly basis at the rate of 0.1%.
For computing the property tax, you need to follow a simple formula. It can be calculated by getting the 80% of the tax base, then subtracting $25,000 from it and getting 1% of the total.
The formula we have seen above is applicable on Cambodia property. There are different tax criteria for different types of land. For example, unused land and rental property.
Unused Land Tax is imposed on non-constructed land and the abandoned constructed land. The property owner must pay Unused Land Tax before 30th September of each year. The tax is 2% on the tax base. The reason why unused property has higher tax is to discourage the property owner from not using their property.
Another important thing is property rental. Tax on Property Rental is charged on residential & commercial buildings, industrial & commercial installed equipment, floating homes or ships. The tax on property rental is 10% of the gross rental.
If you are a Cambodian or a foreign investor interested in the Cambodian property market, Dragon Real Estate can help you. We are the top real estate agent in Sihanoukville, Cambodia.
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