Navigating Rental Property Taxes in Cambodia

Investing in property is a proven way to generate consistent monthly income and meanwhile holding personal or company real estate assets for long term appreciation. If you are an active landlord, understanding rental property taxes in Cambodia is crucial because it ensures that your investments remain compliant and profitable, and you avoid any legal complications into the future.

Not renting but interested in other property tax considerations in Cambodia? Learn more about other important tax considerations for property owners in Cambodia in our Ultimate Guide to Cambodia Property Tax

Just as owning property in Cambodia entails property tax obligations, renting out property in Cambodia also entails specific tax responsibilities. Below, we’ve outlined who needs to pay what taxes for renting out different types of properties in Cambodia:

Who Needs to Pay Rental Property Tax?

If you own property in Cambodia and rent it out, rental property taxes must be paid. Both local and foreign property owners are required to comply with tax regulations, and foreign owners are expected to pay slightly more than Cambodian citizens.

For individual owners:

• Cambodian Citizens: The annual rental income tax rate is 10% of total gross rental earnings as specified in the rental agreement. 
• Foreigners: The annual rental income tax rate is 14% of total gross rental earnings as specified in the rental agreement. 

Additionally, you may be responsible for additional taxes if you are renting the property on behalf of a company or organization. Below is a detailed breakdown:

1. Individual Owner to Individual Renter: No Additional Taxes outside of Rental Income Tax

If you’re renting out your property as an individual to another individual, no additional taxes are applicable. Individual owners are also not required to issue tax invoices for their rental properties.

2. Individual Owner to Company Renter: WHT Applies

If an individual rents out property to a company (or an individual affiliated with a company), Withholding Tax (WHT) applies.

Generally, the property owner is responsible for paying this tax. However, in most cases, the company renting the property deducts and remits the WHT directly to General Department of Taxation (GDT). The specific tax arrangements in this case can be negotiated between the owner and the company renter.

Withholding Tax (WHT) is a tax on income derived from specific payments and transactions, including rental income. This applies to both residents and foreigners.

Learn more about WHT in our Ultimate Guide to Cambodia Property Tax

3. Company Owner to Individual Renter: VAT Applies

For company-owned properties rented to individuals, Value Added Tax (VAT) must be paid. A VAT invoice needs to be issued by the property-owning company, and the tax is typically included in the monthly rental payments. Be sure to calculate and outline the VAT clearly in the lease agreement.

Value Added Tax (VAT) applies to the supply of goods and services.

Businesses and companies renting out properties must register for VAT and obtain a tax identification number (TIN) with the General Department of Taxation (GDT) for tax filing purposes. The standard VAT rate in Cambodia is 10%.

Learn more about VAT in Cambodia in our Ultimate Guide to Cambodia Property Tax

4. Company Owner to Company Renter: VAT Applies

If a company rents its property to another company, VAT is required. The property-owning company must issue a VAT invoice, and the tax is usually embedded in the monthly rent. This arrangement can also be negotiated with the tenant.

Simplify Your Rental Property Management with IPS Cambodia

Navigating the complexities of rental property management requires expertise, particularly when it comes to taxes.

At IPS, we provide comprehensive property management services designed to streamline this process for you. Our team expertly handles tax payments, rental collections, utility bills, and other fees, ensuring that your property investments are managed with precision and efficiency.

To learn more about how our services can benefit you, contact us today.

Experience the IPS Advantage in Cambodia

At IPS Cambodia, we guide property owners and investors through every step of the process, from compliance with tax regulations to maximizing rental income. If you’re exploring property investment options or need help managing your rental properties, reach out to our team.

Ready to find a rental asset, check out the latest properties for sale in Cambodia now!