(Unofficial Translation)

KINGDOM OF CAMBODIA
Nation Religion King
Royal Government of Cambodia
No. 124 OrNKr. BK

Sub-Decree
on
Tax Incentives for Small and Medium-Sized Enterprises in Priority Sectors
The Royal Government of Cambodia

 Having seen the Constitution of the Kingdom of Cambodia;

 Having seen the Royal Decree NS/RKT/0918/925, dated September 06, 2018 on the
Appointment of the Royal Government of Cambodia;
 Having seen the Royal Code NS/RKM/0618/012, dated June 28, 2018 on the Promulgation
of the Law on the Organization and Function of the Council of Ministers;
 Having seen the Royal Code NS/RKM/0196/18, dated January 24, 1996 on the Promulgation
of the Law on the Establishment of the Ministry of Economy and Finance;
 Having seen the Royal Code NS/RKM/0508/016, dated May 13, 2008 on the Promulgation of
the Law on Public Financial System;
 Having seen the Royal Code NS/RKM/0297/03, dated February 24, 1997 on the Promulgation
of the Law on Taxation;
 Having seen the Royal Code NS/RKM/0303/010, dated March 31, 2003 on the Promulgation
of the Law on Amendment of Law on Taxation;
 Having seen the Royal Decree NS/RKM/1213/1444, dated December 31, 2013 on the
Establishment of the Economic and Finance Policy Committee;
 Having seen the Sub-decree 75 OrNKr. BK, dated May 25, 2017 on the Amendment of the
Sub-decree 488 OrNKr. BK dated October 16, 2013 on the Organization and Function of the
Ministry of Economy and Finance;
 Having seen the Sub-decree 488 OrNKr. BK, dated October 16, 2013 on the Organization
and Function of the Ministry of Economy and Finance;
 Having seen Sub-decree 17 OrNKr. BK, dated February 07, 2017 on the Tax Incentives for
Voluntary Register of the SMEs;
 According to the request of the Chairman of Economic and Finance Policy Committee, the
Royal Government of Cambodia hereby:

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Decides
Chapter 1
General Provisions

Article 1: Objective
The objective of this Sub-decree is to promote the development of Small and Medium-
Sized Enterprises (SMEs) for job creation and increase domestic production capacity.

Article 2: Goal
This goal of this Sub-decree is to set conditions for tax incentives.

Article 3: Scope
The incentives provided in this Sub-decree shall cover only SMEs that are in the priority
sectors as stipulated in article 5 of this Sub-decree.

Chapter 2
Definition and Priority Sectors

Article 4: Definition
For the purpose of this Sub-Decree:
1. The term "Small-sized Enterprises" refers to any businesses with an annual turnover
of between 250 million Riel and 700 million Riel, or other enterprises subject to the tax
registration categorized as a small taxpayer in accordance with the laws and regulations,
or with the number of the employees between 10 and 50.
2. The term "Medium-sized Enterprises" refers to any businesses with an annual turnover
of between 700 million Riel and 4,000 million Riel, or other enterprises subject to the
tax registration categorized as a medium taxpayer in accordance with the laws and
regulations, or with the number of employees between 51 and 100.

Article 5: Priority Sectors

For the purpose of this Sub-Decree, priority sectors are defined as follows:
1. Agricultural products or agro-processing;
2. Food production and processing;
3. Manufacturing of goods for domestic consumption, waste processing, and goods for
the tourism sector;
4. Manufacturing of final goods, parts or components to support other manufacturing;
5. Research and development of information technology including the supply of
innovative information management services;
6. Enterprises in the SME clusters, and enterprises that develop those clusters.
These priority sectors do not include those that affect social security, health, and
environment.
Chapter 3
Tax Incentives and Tax Obligations

Article 6: Tax Incentives

SMEs as stated in Articles 4 and 5 of this Sub-decree shall be entitled to the following
tax incentives:
1. Exemption from Tax on Income for a period of 03 (three) years from the date of tax
registration for newly-registered enterprises, or from the date of the renewal of tax
registration of the already-registered enterprises, starting from the entry into force of
this Sub-decree; or
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2. Exemption from Tax on Income for a period of 05 (five) years from the date of tax
registration for the newly-registered enterprises, or from the date of the renewal of tax
registration of already-registered enterprises, starting from this entry into force of this
Sub-decree, fulfilling the following conditions:
 Using at least 60% of local content, or
 Increasing at least 20% of workforce, or
 Located in SME Clusters.
3. Exemption from Prepayment of Tax on Income and Minimum Tax during the tax
exemption period.
4. Incentives for the deductible expenses as follows:
a. Allow 200% deduction of expenses on using accounting books through
information system,
b. Allow 200% deduction of expenses on trainings on accounting book-keeping or
technical skills for employees,
c. Allow 150% deduction of expenses on investment in machines or innovative
high-tech equipment for serving and enhancing production productivity.

Article 7: Tax Obligations

SMEs shall hold the accounting books and file the annual tax return of Tax on Income
in accordance with the tax administration by the due date even if they are exempted from Tax
on Income as set forth in Article 6 of this Sub-decree, and shall file other tax returns in
accordance with the laws and regulations.

Article 8: Incentive Withdrawal

SMEs that do not meet the requirements as stated in Articles 4 and 5 of this Sub-decree
or fail to comply with other tax obligations as stated in the laws and regulations, the tax
incentives set out in the Articles 6 of this Sub-decree shall be revoked.

Chapter 4
Final Provision

Article 9: Abrogation
Any provisions contrary to this Sub-decree shall be abrogated.

Article 10: Implementation

Minister in charge of the Council of Ministers, Minister of Economy and Finance, all
relevant ministers and all head of institutions, shall be responsible for implementing this Sub-
decree based on his/her respective duties from the date of signature.
Phnom Penh, October 02, 2018
Prime Minister

(Signed and Sealed)

Samdech Akka Moha Sena Padei Techo Hun Sen

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Reported to Samdech Akka Moha Sena Padei Techo Prime
Minister for Signature
Deputy Prime Minister
Minister of Economy and Finance
And Chairman of Economic and Finance Policy Committee

(Signed)

Akka Bandith Sakpheajar Aun Pornmoniroth

Delivered to:
- Ministry of Royal Palace
- General Secretariat of Constitutional Council
- General Secretariat of Senate
- General Secretariat of Parliament
- Council of the Prime Minister
- Council of the Deputy Prime Ministers
- Refer to Article 10
- Royal Gazette
- Archive