Cambodia company formation is difficult for foreign investors because of complex Government licensing procedures. That said, economic reforms are attracting foreign, export-orientated manufacturing industries who benefit from Cambodia's low cost advantages. The following information will help to determine whether Cambodia company formation is the optimum corporate structure to fulfill your business objectives:

Cambodia company formation is a legitimate way to conduct business in Cambodia and access the opportunities of the local market. In certain circumstances, a Cambodian company may receive preferential treatment over foreign entities when bidding for government tenders etc. Cambodia enjoyed average annual economic growth of 9.5% over the 10 years since 1999.

Foreign investment in Cambodia is encouraged by the government, which permits 100% foreign ownership of Cambodian companies under certain circumstances. Through the Council for the Development of Cambodia (CDC) foreign investors apply for investment incentives, which include i) exemptions from corporation  tax for 8 years and ii) duty-free imports of production  and construction equipment iii) tax exemption on the distribution of dividends.

Incentives for foreign investors are available to companies involved in sectors encouraged by the Cambodian government, including: high technology industries, export-orientated industries, tourism, physical infrastructure development and energy, environmental protection and investments in areas such as the Phnom Penh Special Economic Zone.

A Cambodia Joint Stock Company is an ideal way for foreign investors to gain ready access to local markets, while providing the Cambodian joint venture partner with funding and technology.

Following Cambodia company formation, Healy Consultants applies for work permits for our client and/or their expatriate staff. Work permits are available for expatriate management personnel, technical and skilled staff and dependents.

Cambodia joined the World Trade Organization (WTO) in 2004. Consequently, Cambodia's economy is being integrated into the global economy, thus expanding market opportunities for foreign investors in Cambodia.

Healy Consultants will open a local corporate bank account following Cambodia company formation. Healy Consultants works with internationally-recognised banks such as HSBC, Standard Chartered and Citibank to provide corporate bank account services.

Cambodia's economy is vulnerable to i) a global economic slowdown, which affects demand for goods manufactured in Cambodia ii) high oil and food prices, increasing local inflation.

Cambodia suffers from a poor international business reputation. It ranks a very poor 164th in the 2011 Corruption Perceptions Index by Transparency International, a measure of corruption amongst public officials and politicians. Furthermore, it is negatively ranked 107th in the world in the 2010 Index of Economic Freedom by the Heritage Organisation, indicating its lack of freedom in business, trade, monetary, financial, investment and labour markets.

The challenges of Cambodia company formation are further highlighted in its very low ranking of 154th in the World Bank's Doing Business 2011 Survey. According to the survey, investors planning Cambodia company formation should expect to face particular difficulties when incorporating the company, as well as obtaining credit.

A Cambodian company requires a minimum of two shareholders. Company directors can also act as shareholders. A Cambodian company requires a minimum of one director. At least one director must be Cambodian, and the ratio of Cambodian to foreign directors must remain at least 30%.

Unless granted tax incentives, a Cambodian company suffers a tax of 20% on worldwide profits. Furthermore, withholding tax of 15% is payable on income received for i) services such as management, consulting ii) payment of royalties and iii) interest payments by a resident taxpayer. Unfortunately, Cambodia has signed no double tax treaties with foreign countries.

Every Cambodian company is required to register for value added tax (VAT), which is charged at a standard rate of 10% for goods exported from Cambodia and services executed outside Cambodia. Input tax credit is deductible against the output tax amount.

Individuals in Cambodia pay a maximum personal income tax of 20%.

Cambodia's banking system is unsophisticated. However, overseas capital transfer, issuance of letter of credit and foreign exchange services are available. Capital borrowing is more challenging than in established Asian financial centres such as Singapore or Hong Kong, terms of lending are shorter and lending rates are typically higher.

A Cambodian company is required to submit audited financial statements if turnover exceeds 250 million riels (US$60,700) for service companies or 500 million riels (US$121,400) for trading companies. Furthermore, a Cambodian company is required to file monthly tax returns with the Cambodian Tax Department, even if no transactions took place. Healy Consultants can assist your Cambodian firm fulfill all local accounting and tax compliance obligations.

The minimum capital requirement for a Cambodian limited liability company is at an issued and paid up capital of 200 million Riels (US$50,000) at a par value per share, which must be paid either fully in cash or with non-cash items before the company can be incorporated.

Contact Us
For more information on Cambodia company formation, contact email@healyconsultants.com or phone us at (+65) 6735 0120.