Cambodia’s New Tax Laws 2026: What US & UK Residents Need to Know

Navigating a foreign tax system can often feel like trekking through a dense jungle without a compass. However, as we move through 2026, Cambodia has significantly modernized its fiscal landscape to align with international standards. For residents and investors from the US and UK, understanding these nuances is not just about compliance—it is about optimizing your Return on Investment (ROI) in one of Asia’s most dynamic markets.

Key Highlights for 2026

• Capital Gains Postponement: Based on data released by AKP, the 20% Capital Gains Tax on property and other productive assets remains suspended until the beginning of 2027.
• Double Taxation Agreements (DTA): Cambodia is aggressively expanding its DTA network to prevent investors from being taxed twice on the same income.
• E-Filing Maturity: The digital transformation of the General Department of Taxation (GDT) has reached full maturity in 2026, making tax residency applications seamless.
• Incentives for “Green” Projects: New tax holidays are available for Western firms investing in renewable energy and sustainable tech.

The Core Pillars of Cambodian Taxation

For a Westerner living or doing business in the Kingdom, the tax system is primarily territorial. This means you are generally taxed on income sourced within Cambodia.

1. Resident vs. Non-Resident Tax

Understanding your status is vital. You are considered a Tax Resident if you are in Cambodia for more than 182 days in any 12-month period.

• Residents: Taxed on worldwide income (though DTA protections often apply).
• Non-Residents: Taxed only on Cambodian-sourced income at a flat rate of 20%.

2. Personal Income Tax (Tax on Salary)

Cambodia uses a progressive scale for salary tax. Official reports from AKP indicate that the tax-exempt threshold was adjusted in early 2026 to account for the rising cost of living, providing a slight relief for mid-level expat professionals.

3. Corporate Income Tax (CIT)

The standard CIT rate remains at 20%. However, if you are operating a “Qualified Investment Project” (QIP), you may be eligible for a tax-free “holiday” period of up to 9 years.

Analogy: Think of a QIP like a “VIP Pass” at a high-end resort; you get to enjoy all the infrastructure and benefits of the market while the government waives your entry fees (taxes) to encourage your long-term stay.

Strategic Tax Updates for US & UK Stakeholders

The most significant shift in 2026 is the focus on transparency. The state news agency (AKP) highlighted that Cambodia is working closely with international financial bodies to ensure its tax system remains “White-Listed” and attractive to Western institutional capital.

The Double Taxation Advantage

For UK residents, the existing DTA between the UK and Cambodia provides a clear framework to avoid paying tax twice. While the US does not yet have a formal DTA with Cambodia, American citizens can often utilize the Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credits to mitigate their liability back home.

Executive Summary

FAQ: What Westerners Often Ask