MEF spells out rental and other tax rates
The Ministry of Economy and Finance (MEF) issued a proclamation on March 29 regarding the rental property tax rates thus establishing the rules and procedures for the management of property tax collection in the Cambodian real estate sector henceforth.
The recent property tax update from the MEF comes alongside various other tax compliance reforms pioneered by the government in early 2024.
Outlined in Prakas No. 169, which entered into effect from its date of signing, March 20, 2024, the MEF confirmed the tax on real estate rentals is henceforth levied at a rate of 10 percent of total real estate rent, per month.
The Prakas clarifies that property rent refers to the gross wage contracted or agreed upon with the lessee, which pays respect to the market value of the property being leased.
The tax base for real estate fees therefore considers both monthly rental income and total rental revenue paid by tenant and received by the property owner or entity
The Prakas applies to assignees, defined as someone who has been granted rights to the property by the owner, who is renting real estate under the self-declaration regime for property taxes.
The new rules and procedures for property tax collection will apply to stipulated types of real estate only, according to the MEF announcement, which includes buildings and structures, including houses, factories, hotels, offices, and their adjoining fixtures.
The recent regulations also stipulate tax rates for various other real estate components able to be leased, such as buildings, structures, industrial mobiles, and land without compensation.
Specifically, the new regulation covers tax on equipment attached to industrial buildings, commercial and industrial goods located on the premises within warehouses or large buildings, mobile homes used for living or business purposes, and, finally, taxes due on vacant land.
However, some types of rentals are exempt from the rental tax levy, according to the MEF.
Exemptions from property tax include state property leases of embassies, international organizations, non-profit entities, and rentals costing below 500,000 KHR per month.
The new regulations set by the MEF to govern the management of property tax collection aim to streamline property tax procedures and ensure fair and equal taxation across the real estate sector.
In addition to the clarification on property tax, the MEF has also introduced tax declarations and incentives across eight other sectors in recent updates.
These additional tax regulations introduced include a five percent value-added tax (VAT) for taxable products including alcohol and tobacco, a two percent accommodation tax for various types of lodging establishments, a 30 percent income tax on petroleum transactions, an income tax of 30 percent on any mining operations, along with variable tax rates to be applied on billboards for advertisers, based on size and type.
The MEF has also installed VAT incentives for agricultural enterprises engaged in the production and export of various crops and animal products, state tax exemptions for basic food items, and new tax incentives for educational institutions, exempting them from income tax obligations.
These comprehensive measures aim to bolster tax compliance, encourage sectoral growth, and contribute to Cambodia’s economic development.
Source : https://www.khmertimeskh.com
