Investing In... 2026 Comparisons

From its independence in 1953 until the promulgation of the 1993 Constitution, Cambodia experienced several legal system models. Its current legal system is broadly characterised as a civil law system, significantly shaped by both French and Japanese civil law influences. Some commercial laws, such as the

• law on commercial enterprises;
• law on secured transactions;
• law on commercial arbitration;
• law on negotiable instruments and payment transactions; and
• the law on trusts,

were also influenced by the model laws of the United Nations Commission on International Trade Law (UNCITRAL) and common law legal concepts.

The Constitution establishes the separation of powers between the legislature, the executive and the judiciary. The Constitution grants the legislative power the authority to adopt laws, and most laws stipulate the executive’s functions for implementing them through regulations. The judiciary is tasked by the Constitution with receiving and reviewing complaints and making decisions in accordance with the law. Notably, in line with Cambodia’s civil law system, judicial decisions do not constitute binding precedents, unlike in common law systems.

Cambodia’s court system is structured into three levels: the Court of First Instance, which serves as the lower court, and the higher courts, comprising the Court of Appeal and the Supreme Court. The Court of First Instance functions as the primary forum for adjudicating both factual and legal matters. The Court of Appeal, as the second-level court, also reviews and adjudicates issues of fact and law arising from decisions of the lower court. The Supreme Court is the highest appellate court. It is worth noting that Cambodia is a state party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and has adopted and implemented it.

Cambodia welcomes all legitimate sources of FDI. FDI is administered through a procedural approval framework under the 2021 Law on Investment, which replaced the 1997 Law on Investment. The regime is notably open and liberal, permitting up to 100% foreign ownership in most sectors, with the key constitutional restriction being that foreigners may not own land. Foreign investors may, however, obtain long-term rights to use land through perpetual leases or economic land concessions up to 50 years with renewal options. Joint ventures are generally unrestricted, except where land ownership is involved, in which case foreign shareholding may not exceed 49% in land-owning companies. Foreigners may own immovable properties in strata-titled buildings from the second floor and up to 70% of the total strata-titled area, except in buildings close to Cambodia’s borders.

FDI approvals are administered by the Council for the Development of Cambodia (CDC), the Government’s central “one-stop” investment authority. Its operational arm, the Cambodian Investment Board (CIB), reviews investment applications, grants Qualified Investment Project (QIP) status and coordinates sector-specific licensing with line ministries. Provincial/Municipal Investment Sub-Committees (PMIS) review smaller-scale projects, while the Cambodian Special Economic Zones Board (CSEZB) facilitates investments within Special Economic Zones (SEZs). These bodies primarily operate as administrative facilitators rather than as restrictive screening authorities.

Although Cambodia does not maintain a general FDI review regime, certain sectors remain subject to licensing and regulatory oversight, including banking and financial services, telecommunications, energy and extractive industries, air and maritime transport, media and broadcasting, and commercial gambling. These requirements concern technical and sectoral regulation rather than foreign ownership control.

The 2021 Law on Investment modernised and streamlined existing investment procedures, shortened approval timelines, expanded tax and customs incentives, introduced an online application portal and established a Negative List restricting only activities harmful to health, the environment or national interests. Overall, Cambodia’s FDI regime remains highly liberal and investor-friendly as the free flow of capital is ensured under both the 2021 Law on Investment and the 1997 Law on Foreign Exchange.

In the wake of the global COVID-19 pandemic, Cambodia has demonstrated remarkable economic resilience and an ongoing commitment to reform, positioning itself as an increasingly attractive destination for FDI within Southeast Asia. Following the disruptions of 2020–2021, the country’s economy rebounded steadily, supported by the recovery of tourism, renewed export momentum in garments and manufacturing and the government’s proactive fiscal and investment policies. Cambodia’s competitive labour costs, strategic location at the heart of the Mekong subregion, and open trade regime continue to underpin its appeal as a production base and gateway to ASEAN markets.

The government’s enactment of the Law on Investment in 2021 marked a significant milestone in Cambodia’s economic reform agenda, modernising the regulatory framework and strengthening investor confidence. The 2021 Law on Investment streamlined existing approval processes through the CDC, expanded tax and non-tax incentives for qualified projects, explicitly permitted 100% foreign ownership across most sectors and reaffirmed Cambodia’s commitment to fair treatment and investment protection. These reforms signal a clear policy direction toward attracting high-quality, sustainable, technology-oriented FDI, particularly in manufacturing, agribusiness, renewable energy and tourism-related infrastructure. The Cambodian economy is highly dollarised, as foreign currency is not restricted under the 1997 Law on Foreign Exchange; therefore, foreign exchange rate risk is not a burden for foreign investors in Cambodia.

While Cambodia’s business environment is evolving, its outlook remains strongly positive. The government has intensified efforts to improve administrative transparency, strengthen legal certainty, and promote public-private partnerships to accelerate infrastructure development. Investors have benefited from improved customs procedures, digital registration systems and greater engagement by economic ministries to ensure that foreign investment is efficiently facilitated. Although some structural challenges persist, such as institutional capacity and regulatory consistency, the overall trend is toward improvement. The country’s young workforce, growing consumer market, and deepening regional integration through ASEAN and bilateral trade agreements offer long-term growth prospects for investors seeking a stable and expanding base in Southeast Asia.

Recent events, including the imposition of trade tariffs with the USA and the Cambodia–Thailand border dispute, have introduced temporary headwinds to cross-border trade and logistics. Despite these events, the Cambodian government has acted prudently to maintain macroeconomic stability and investor confidence. Cambodia’s diversified investment base, improving domestic infrastructure, and strong relationships with development partners have collectively mitigated risks, ensuring that the overall investment climate remains stable.

Looking ahead, the outlook for Cambodia is one of cautious optimism and continued progress. The government’s focus on attracting “quality investment”, meaning those investments that deliver sustainable development, employment and technology transfer, reflects a mature and forward-looking policy stance. Investors can expect continuity in pro-investment reforms, improved regulatory efficiency, a sound macroeconomic environment, and a stringent anti-money laundering framework, all of which are conducive to steady growth. In essence, Cambodia’s post-pandemic recovery has evolved into a platform for renewed opportunity. With a clear commitment to reform, a young and capable workforce, and a resilient economy that continues to adapt to global challenges, Cambodia stands ready to welcome investors with both stability and promise. For those seeking long-term engagement, the message is clear: Cambodia remains open, reform-driven and ready for responsible growth.

In Cambodia, the structures used for Mergers and Acquisitions (M&A) transactions generally vary based on the parties’ commercial objectives, financial strategy, and regulatory considerations. It is notable that the three most common deal structures are:

• share acquisitions;
• asset acquisitions; and
• business acquisitions.

Share acquisitions remain the preferred approach for entire-company acquisitions, as they allow for a relatively straightforward transfer of ownership without requiring the separate transfer of licenses, contracts or employment arrangements. Share transfers attract 0.1% stamp duty, except for transfers of shares in a land-holding company, which attracts 4% stamp duty.

Conversely, acquisitions are typically used where an investor intends to purchase only selected assets while avoiding legacy liabilities and operational risks. 10% value-added tax will apply to asset acquisitions. Business acquisition can be used to acquire both a company’s assets and liabilities, enabling the selling company to be wound down. In practice, the structures used for acquiring public companies do not fundamentally differ from those used for private companies. However, public companies can be established either under their own statute or by registration with the Ministry of Commerce (MOC). Therefore, the acquisition of public enterprises established by their own statutes cannot be effected by share transfers but only by concession or sale of public assets.

Key considerations for foreign investors when determining an appropriate transaction structure include:

• tax implications, including transfer tax (stamp duty) and value-added tax, as well as tax exposure associated with the shares or assets;
• legal and regulatory frameworks, especially for regulated entities;
• liability allocations subject to disclosed liabilities and due diligence;
• financial and commercial strategies; and
• operational continuity, especially in the management of employees.

Similar to full M&A transactions, the commonly used structure for minority investments is a share purchase, which is typically supported by a detailed shareholders’ agreement that includes reserved matters, governance rights, information access and exit mechanisms to safeguard the investor’s interests and ensure long-term alignment with the company’s objectives.

Aside from the regulatory regimes applicable to FDI, domestic M&A transactions in Cambodia may trigger several regulatory reviews or notifications that foreign investors should be aware of. The most significant is the merger control regime governed by the 2021 Law on Competition and its implementing regulations. Depending on whether the transaction meets the financial thresholds set out in such regulations, the parties may be required to submit either a pre-merger notification (for transactions meeting or exceeding 100% of the threshold) or a post-merger notification (for transactions reaching 50% or more but less than 100% of the threshold). Pre-merger notifications must be filed with the Competition Commission of Cambodia (CCC) before closing, while post-merger notifications must be submitted within 30 working days following completion of the M&A transaction.

In addition to the filing with the CCC, M&A transactions involving regulated industries also require sector-specific approval from the relevant line ministries or regulatory authorities, for instance:

• acquisitions of banks and financial institutions require approval from the National Bank of Cambodia (NBC); while
• transactions involving insurance companies and trust companies require approval from the Insurance Regulator of Cambodia and the Trust Regulator under the Non-Bank Financial Services Authority (NBFSA).

Other sectors, such as telecommunications, gaming and mining, may also require approval from the relevant line ministries. M&A transactions involving companies with QIP status also require CDC approval. For M&A transactions involving a listed or public company, the target may also be subject to additional requirements, including timely disclosure of obligations or mandatory tender-offer requirements under the rules and regulations of the Securities and Exchange Regulator of Cambodia (SERC).

The aforementioned regulatory layers apply in addition to the general corporate registration requirements under the 2005 Law on Commercial Enterprises and the relevant regulations issued by the MOC and the General Department of Taxation (GDT).

The basic legal instrument for corporate governance is the 2005 Law on Commercial Enterprises. The 2005 Law on Commercial Enterprises divides entities into private limited liability companies (LLC) and public limited liability companies (PLC), as outlined below.

• A PLC is mandatory for a regulated financial company, a listed company selling public securities, and a company with more than 30 shareholders.
• An LLC may have one director, while a PLC must have at least three directors.

In addition to the general provisions under the 2005 Law on Commercial Enterprises, the operation of a business in the regulated sector includes corporate governance rules and is subject to additional requirements for:

• fit and proper qualifications;
• proportionate independent directors;
• a committee for risk and audit; and
• internal controls for internal audit and legal compliance.

Unless the articles of incorporation provide otherwise, the director’s term for an LLC is two years. In the securities sector, an independent director shall have a term of three years, renewable up to 9 years in total. There is no restriction on foreigners, including foreign investors, serving as directors.

The board of directors may, as necessary, establish committees by written resolution to facilitate its affairs. Each committee shall consist of one or more directors appointed by a majority of the board of directors.

The board of directors shall be led by a chairman, who is selected from among its members. The chairman may be removed from the position by a majority vote of the directors, but not from his or her position as a director of the company. The board chairman may call a meeting of the board of directors. The chairman of the board of directors and the director shall have equal voting rights. However, the articles of incorporation of the company might give the chairman of the board of directors a casting vote to avoid blocking the board’s decisions.

The rights and protections of minority investors are governed by the 2005 Law on Commercial Enterprises and the 2007 Law on the Issuance and Trading of Non-Governmental Securities for listed companies, which provide that retail investors are considered minority shareholders for investments in equity securities. These laws and regulations seek to balance minority and majority shareholder interests, with greater protection afforded in public companies or listed entities.

Public Companies or Listed Entities

Listed entities shall comply with both the 2005 Law on Commercial Enterprises and the corporate governance regulation for listed companies to protect minority shareholders. The basic requirements are:

• enhanced transparency through access to corporate documents, audited financial statements or annual reports and regular as well as special public disclosure;
• the balance between the board of directors and shareholders, as well as decisions by special majority vote required for certain material matters;
• requirement for independent directors to promote fairness and prevent minority oppression; and
• the appointment of a professional shareholder’s representative to safeguard the interests of minority shareholders within the company.

Private Companies

A private company or LLC does not have specific requirements for the protection of minority shareholders; however, their general requirements also have implications on minority shareholders’ protection, such as:

• access to financial records and participation in key decisions that require special majority shareholders’ resolutions;
1. protections under contractual rights, such as shareholders’ agreements for:
2. pre-emptive rights to prevent ownership dilution;
3. tag-along rights to ensure fair exit opportunities;
4. nomination and election of directors;
5. reserved matters for unanimous or special majority shareholders’ resolutions;
6. mechanism for deadlocks; and
7. dispute resolution clauses; or
• powers of directors or the board of directors in balance to shareholders, especially majority shareholders.

FDI in Cambodia is not subject to public disclosure, except for listed entities and financial institutions. However, companies are generally subject to reporting obligations under the 2005 Law on Commercial Enterprises and under the 2021 Law on Investment for QIPs. Entities with QIP status are required to file annual compliance reports to the CDC. As a general company, it also needs to file monthly and annual declarations with the tax authority to fulfil its tax obligations. Annually, it also needs to file declarations with the MOC for any update or change to the company’s general information.

If the investment is with a financial institution or is subject to supervisory requirements, it is also subject to regular reporting requirements as part of its prudential obligations or other information obligations. Some financial institutions, such as banks and insurance companies, need to prepare annual reports with audited financial statements for publication as well. FDIs that raise funds by issuing securities in the capital market are subject to higher disclosure requirements.

Companies are required to prepare financial reports in accordance with the adopted accounting standards for filing with the accounting regulator, whereas companies with significant assets, employees, or revenue above a regulatory threshold must have their financial statements audited by an independent auditor.

Cambodia’s capital market is still in a nascent stage but is steadily developing. The Cambodia Securities Exchange (CSX), established in 2011, remains the primary platform for equity listings and bond issuances.

However, most businesses continue to rely heavily on bank financing due to limited market depth and investor participation. Commercial banks dominate the financial landscape, offering loans and credit facilities as the main sources of funding.

Recent regulatory efforts, including tax incentives and simplified listing procedures, aim to encourage more companies to access capital markets. Nonetheless, for foreign investors, bank financing remains the more accessible and commonly used route for business funding.

Cambodia’s capital markets are governed by the 2007 Law on the Issuance and Trading of Non-Government Securities, which is enforced by the SERC. SERC operates under the supervision of the NBFSA. SERC serves as the central authority responsible for:

• regulating and supervising Cambodia’s securities markets;
• enforcing policies;
• setting approval and licensing conditions for market operators and securities firms;
• promoting compliance; and
• resolving investor-related disputes.

In general, a foreign investor engaging in ordinary FDI is not subject to securities regulations. However, if the investor raises funds in capital markets, purchases securities in a listed company, or engages in a regulated securities activity, then the investor becomes subject to the applicable securities laws and regulations under SERC.

Cambodia offers one of the region’s most open investment environments, allowing 100% foreign ownership in nearly all sectors. This openness has made FDI a critical driver of Cambodia’s economic growth. FDI is facilitated through mechanisms such as:

• incorporation of subsidiaries;
• equity participation;
• joint ventures;
• shareholder loans; and
• licensing and franchising arrangements.

For investment funds, there is no dedicated FDI screening based solely on their structure. Instead, regulatory scrutiny primarily focuses on the nature of their activities and the sectors they target.

While Cambodia welcomes foreign investments, certain industries face restrictions or additional requirements. These include (i) media, (ii) natural resources and (iii) land ownership, where investors may need to obtain specific licenses or comply with particular regulations.

To encourage investment, Cambodia offers various incentives. Investors can apply for QIP status through the CDC. QIP status can provide benefits such as tax breaks and customs duty exemptions. Projects located in SEZs are particularly encouraged for manufacturing for export, especially when they contribute to job creation, infrastructure development and sectoral growth. These measures highlight Cambodia’s commitment to fostering a business-friendly environment.

Cambodia has adopted a merger control regime under the 2021 Law on Competition, specifically Section 3 on “Business Combinations”. This law empowers the CCC to review mergers, acquisitions, and joint ventures to determine whether they significantly prevent, restrict, or distort competition in the Cambodian market. The regime is further detailed in regulations that set out the requirements and procedures for business combinations and pre-notification thresholds. In accordance with the law, FDI transactions are subject to notification if they meet thresholds based on assets, turnover, or transaction values. The process and timelines have been outlined below.

Pre-Notification and Completeness Check

Parties proposing to undertake a Business Combination must provide a pre-notification and submit relevant documents and information to the CCC as required by the regulations. Upon submission, the CCC has seven working days to issue a notice confirming completeness or incompleteness. If no notice is issued within this period, the notification is deemed complete and valid. If the CCC issues the notice to the notifying parties, the notifying parties must provide the required documents within 30 working days. Failure to do so renders the notification void and requires resubmission to the CCC.

Primary Review

If the notifying parties have completed providing the additional documents and information by the deadline set out by the CCC, the CCC has thirty working days to issue the results of its primary review. The CCC may either permit the Business Combination to proceed or refer it to a secondary review. If no notice is issued within this period, the transaction may be completed.

Secondary Review

Where a secondary review is required, the notifying parties must provide additional documents by the CCC’s deadline. The CCC then has 60 working days to complete its review, with possible extensions of 30 working days each, up to two times. The CCC must issue a decision by the end of the review period, including any extensions or suspensions, as follows:

• the Business Combination may be completed;
• the Business Combination may be completed subject to conditions; or
• the Business Combination is prohibited.

Exemptions and Substantive Review

Exemptions are limited to restructurings mandated by law or transactions that do not materially affect competition. Even where transactions fall below the thresholds, the CCC retains authority to conduct a substantive review, focusing on market dominance, entry barriers and consumer welfare.

Cambodia has established a merger control regime pursuant to the 2021 Law on Competition and its regulations. Under this framework, the CCC is empowered to conduct a substantive competitive assessment of mergers, acquisitions, and other business combinations. The purpose of this review is to determine whether the transaction would have a significant effect on preventing, restricting, or distorting competition in the Cambodian market.

In conducting its assessment, the CCC considers several key criteria. These include the structure of the relevant market and the level of concentration, with particular attention to whether the merger creates or strengthens a dominant position. The CCC examines substantive overlaps in products, services and geographic markets, and evaluates whether the transaction eliminates an important competitor or reduces consumer choice. The analysis extends to potential competitive effects such as:

• price increases;
• reduced output;
• lower quality;
• diminished innovation; or
• the risk of coordinated conduct among remaining competitors.

Entry barriers are also assessed to determine whether new firms could realistically enter the market to restore competition, taking into account regulatory, financial, and technological constraints.

Beyond competition-specific concerns, the CCC may weigh broader public interest considerations, including:

• the impact on small and medium enterprises;
• consumer welfare; and
• Cambodia’s economic development objectives.

The review process begins with mandatory pre-merger notification where thresholds are met, followed by an initial screening and, if necessary, an in-depth investigation. Depending on the findings, the CCC may approve the transaction, approve it subject to remedies or prohibit it outright.

Accordingly, Cambodia’s merger control regime involves a substantive overlap and competitive assessment of investments, ensuring that business combinations are consistent with the principles of fair competition, consumer protection and sustainable market development.

Cambodia does have a merger control regime under the 2021 Law on Competition and its implementing regulations. Under this framework, the CCC may request or require remedies and commitments when a merger or acquisition raises competition concerns. The types of remedies include:

• structural remedies – divestiture of assets, subsidiaries, or business units to reduce market concentration and prevent the creation or strengthening of a dominant position;
• behavioural remedies – commitments by the merging parties to preserve fair competition, such as maintaining non-discriminatory pricing, ensuring access to essential facilities or supply chains, refraining from exclusive dealing arrangements, or continuing to supply certain products or services; and
• additional commitments – reporting obligations, compliance monitoring, and periodic reviews to ensure effective implementation of remedies.

Where remedies or commitments are insufficient to address competitive harm, the CCC retains the authority to prohibit the transaction outright.

Accordingly, the remedies or commitments that may be required by the CCC include:

• structural divestments;
• behavioural obligations;
• transparency and reporting requirements; and
• (in some cases) outright prohibition of the merger or acquisition.

These measures ensure that business combinations contribute to Cambodia’s economic development while safeguarding consumer welfare and the competitive process.

The CCC is empowered to block or challenge FDI transactions that significantly restrict, prevent or distort competition. This authority applies both before the investment is completed through mandatory pre-merger notification and review and after the investment has been made, if the transaction was not properly notified or if new evidence of anti-competitive effects arises. The process requires foreign investors to notify the CCC when thresholds are met, after which the CCC conducts an initial review and, if necessary, an in-depth investigation into:

• market concentration;
• entry barriers;
• consumer welfare; and
• public interest considerations.

The CCC is the ultimate decision maker and may approve, approve with remedies, or prohibit the transaction. Investors retain the right to appeal CCC decisions through Cambodia’s judicial system. If an investment is made without prior approval, the consequences can include:

• financial penalties;
• orders to unwind or restructure the transaction;
• operational restrictions; and
• reputational damage.

In this way, Cambodia ensures that FDI contributes to economic development while safeguarding fair competition and consumer protection.

Cambodia does not maintain a dedicated national security-based foreign investment screening mechanism. Foreign investment oversight is primarily conducted through the CDC for projects seeking investment incentives and through sectoral regulators for activities requiring industry-specific licensing. Outside these frameworks and apart from Cambodia’s constitutional restriction on foreign land ownership, the investment regime remains largely open, and no standalone national security clearance is required before investing.

Relevant Authorities

Council for the Development of Cambodia (CDC)

The CDC is Cambodia’s “one-stop service” for investment projects seeking registration as QIPs or Guaranteed Investment Projects (GIPs). It evaluates investment proposals, assesses eligibility for tax and customs incentives, and issues Registration Certificates. CDC approval is primarily administrative and does not replace any sector-specific regulatory approvals that may also be required.

Sectoral ministries and regulators

Foreign investors operating in regulated industries must obtain licenses or approvals from the relevant authorities before commencing operations, as outlined below.

• National Bank of Cambodia (NBC) – for banking and financial institutions operating in either credit, deposit or payment;
• Ministry of Post & Telecommunications (MPTC) through the Telecommunications Regulator of Cambodia (TRC) – for telecommunications;
• Non-bank Financial Services Authority (NBFSA) – for securities, real estate, pawnshop, trust, accounting, gambling and insurance sectors; and
• Ministry of Land Management, Urban Planning, Construction and Cadastral (MLMUPC) – for the construction and architectural design sector.

These regulators review ownership structures, minimum capital, “fit-and-proper” requirements, and operational readiness.

Types of FDI Subject to Review

Investment projects seeking QIP/GIP incentives must undergo the CDC registration process.

FDI in regulated sectors such as banking, insurance, securities, telecommunications, certain utilities, and some energy activities must secure sectoral licenses/approvals before operations. These reviews may include due diligence checks on shareholders and management.

Real estate development investments, depending on their characteristics, may require obtaining prior business licenses/permits. Land ownership in general is subject to Cambodia’s constitutional restrictions, under which foreigners may not own land directly but may hold interests through long-term leases or other legal mechanisms, such as trusts.

FDI in construction and design-related business activities may also require business licenses/permits.

Exemptions

Cambodia does not provide special exemptions for state-owned enterprises, sovereign wealth funds, or specific categories of foreign investors. However:

investments in non-regulated sectors (eg, retail trading, hospitality, consulting, general manufacturing) generally require only standard corporate and tax registration;

investors not seeking QIP/GIP incentives may bypass the CDC and proceed directly with standard company incorporation under the MOC (these procedures are largely administrative rather than discretionary); and

state-owned enterprises may be formed under their own statutes or by registration with the MOC and their operations and treatment may differ depending on their means of incorporation.

Process and Timeline

• CDC QIP/GIP registration.
• Submission of the investment proposal and supporting documents.
• CDC reviews the application and must issue a decision within 20 working days, provided the file is complete.
• Upon approval, the investor receives a registration certificate and may begin implementing the project.
• Any additional sectoral licenses required for regulated activities must still be obtained before operations begin.

Sectoral licensing

Timelines vary widely depending on the sector and project complexity. Licensing generally requires the submission of:

• ownership details;
• business plans;
• technical, management or operational team compositions; and
• financial information and compliance documents.

Operations cannot commence until all relevant sectoral licenses are granted.

Requirement for Prior Clearance

Cambodia does not require any national security-specific pre-investment clearance for foreign investors. Unless a project (i) seeks QIP/GIP incentives or (ii) operates within a regulated sector, foreign investors typically proceed through the ordinary company registration process and tax registration.

As Cambodia does not have a foreign investment or national security screening regime, the criteria applied to investment review depend on the mandate of the sectoral regulator involved (eg, banking, insurance, securities, telecommunications). Nevertheless, several core themes and evaluative criteria appear consistently across regulatory frameworks.

General Criteria Across Sectors

Regulators typically evaluate the following.

Investor qualification and fitness

Background, professional reputation, governance history, and compliance record of shareholders, directors, and senior management.

For financial institutions, “fit-and-proper” standards are expressly required.

Financial capacity and capital adequacy

Sufficiency and legitimacy of capital contributions, liquidity, and financial resources supporting the investment.

Verification of funding sources, especially in banking, insurance and telecoms.

Impact on public order, safety and strategic infrastructure

While Cambodia lacks a national security review mechanism, regulators may still consider operational risks in sectors involving essential services (eg, telecommunications networks, banking systems, payment infrastructure, energy grids).

Environmental and social compliance

Review of social and environmental impact assessments (where applicable), entering into an environmental contract (if required), management of solid and liquid wastes, and adherence to labour, safety, and environmental laws and standards as required by the national law or local authorities’ requirements.

Legal and ownership restrictions

Compliance with statutory limits, including Cambodia’s prohibition on direct foreign ownership of land under the Constitution. Private ownership is protected by the Constitution, while the government may expropriate private property in the public interest with fair and just compensation.

Business plan and economic contribution

Feasibility of the proposed project, alignment with sectoral development goals, and potential economic or technological benefits.

Technical expertise and operational capability

Required in sectors such as construction, design, telecoms, energy, and financial services, where regulators assess technical competence, systems, and risk-management capacity.

Different Treatment by Investment Type

Partnerships and joint ventures

Joint ventures are reviewed under the same criteria as wholly foreign-owned companies. Approval requirements depend solely on whether the project falls within a regulated industry.

Acquisitions by foreign governments or state-owned entities

There are no formal restrictions on foreign state-owned enterprises. However, regulators may apply stricter assessments of:

• strategic control of key assets;
• political or geopolitical influence; and
• transparency of funding sources.

Non-controlling minority investments

• Minority investments are generally permitted without prior approval unless they cross regulatory thresholds.
• In the banking sector, any acquisitions of voting shares require NBC approval.
• In the telecommunications sector, any entity operating network infrastructure must be licensed.

The 2021 Law on Investment establishes an open and liberal foreign investment regime with minimal restrictions on foreign participation, and there is no unified or centralised screening law on remedies or commitments for foreign investment.

As general obligations, QIP or GIP investors must comply with legal commitments attached to the registration certificate, including:

• compliance with the approved investment plan, covering the schedule and scope submitted to the CDC (deviations may trigger suspension of incentives, revocation, or penalties); and
• reporting obligations, including investment capital status, construction/progress milestones, operational data and employment information (failure may result in withdrawal of tax incentives).

In addition, foreign investors must comply with sector-specific requirements under licensing rules and other regulations, including:

• financial sector – prudential requirements for financial management, higher standards of corporate governance and internal controls, reporting requirements and consumer protection; and
• telecommunications (MPTC/TRC) – network security, data retention, lawful interception compliance, technical capacity obligations, and licence conditions such as rollout milestones and quality-of-service requirements (under the 2015 Telecommunications Law and licensing regulations).

In addition, foreign investors engaging in physical development must also comply with construction permits and safety regulations (2019 Law on Construction), land-use and ownership restrictions (2001 Land Law) and environmental and social obligations, including Environmental Impact Assessments (EIAs), if applicable (2023 Environmental and Natural Resources Code). Tax and accounting obligations under the 2023 Law on Taxation and regulations also apply to financial reports and payment of tax obligations. Failure or breach may result in suspension of projects or incentives, revocation of permits, tax reassessments, and penalties.

Cambodia has no centralised FDI enforcement regime. Monitoring or restrictions arise through the powers granted under the 2021 Investment Law, sector-specific legislation, and regulatory instruments.

Prior to Investment

The CDC or the PMIS may deny registration if the application is incomplete, eligibility criteria are not fulfilled, the project violates laws or public order, or the proposed activities fall within prohibited sectors.

Sectoral regulators may deny approval if:

• ownership or shareholding exceeds regulatory limits;
• fit-and-proper requirements are not met;
• capital adequacy or technical capability conditions fail; or
• the investment poses risks to financial stability or essential services.

Post-Investment

Regulators may restrict or unwind investments after post-registration or post-licensing.

The CDC may revoke QIP/GIP status for failure to implement the project, violation of tax or customs obligations, breach of reporting obligations, or non-compliance with environmental, labour, or safety laws.

Sector regulators

Regulators may suspend/revoke licences, prohibit certain shareholders or managers, issue corrective actions or restructuring orders, require additional capital, require removal of non-compliant managers, impose additional obligations, and impose penalties and sanctions.

Anti-money Laundering and Combating the Financing of Terrorism (AML/CFT) requirements

The competent authority may enforce AML/CFT obligations by requiring reporting entities to conduct due diligence on consumers and transactions, report on suspicious transactions and freeze any suspicious funds up to 48 hours.

Consequences of Making an Investment Without Prior Approval

Consequences depend on whether the investment falls within a regulated sector or requires QIP/GIP registration. Operating a regulated business without approval may result in suspension, fines, asset seizure, a temporary prohibition on licensing or criminal liability for responsible individuals in certain sectors. Investments without securing QIP/GIP status through CDC registration merely lose the right to incentives. Further, violating foreign land ownership restrictions may invalidate transactions, cause forfeiture risks, or result in refusal of registration. Unregistered businesses also face tax reassessments and potential business suspensions.

Appeal Rights

Foreign investors may appeal adverse decisions through internal administrative reconsiderations, depending on the authority involved and based on their rules or procedures, and ultimately through the courts. Although Cambodia does not maintain a dedicated appellate body for FDI, appeal rights are governed by the 2021 Investment Law, sectoral legislation, and general legal principles. Arbitration may also be available depending on contractual terms or applicable investment treaties or agreements.

Cambodia does not have any sanctions regimes and follows only the United Nations sanctions list. With regards to real estate transactions, foreigners cannot own land in Cambodia, but they may own strata-titled real estate properties from the second floor and up to 70% of the total area in a strata-titled building, except near Cambodia’s borders. Cambodia has a free flow of foreign exchange as well as capital flow without restriction unless there is a foreign exchange crisis, for which the government may impose three-month restrictions, plus the possibility of a three-month extension, with the approval of the Ministry of Economy and Finance (MEF).

As for facilitating investment in Cambodia, in 2019, Cambodia adopted the Law on E-commerce to recognise electronic communications, documents and signatures. The 2019 Law on E-commerce also establishes a regime for e-commerce operators to apply for permits or licenses to carry out e-commerce in Cambodia. In order to support SMEs, there is a separate regime for SMEs to register to obtain tax incentives in certain business operations and sectors.

In addition to registration requirements, corporate governance, reporting obligations and disclosure, businesses are also subject to consumer protection and fair business conduct and practice obligations, including food labelling and safety.

Cambodia has a self-assessment taxation system that applies to both foreign and domestic investors. Investors register with the Cambodian taxation authorities as taxpayers and are classified according to their:

• legal status;
• turnover;
• assets; and
• activities as “small”, “medium” or “large” taxpayers.

Small taxpayers are typically sole proprietorships or partnerships. Medium taxpayers are generally incorporated legal entities and representative offices. Large taxpayers include entities with turnovers of approximately USD1 million to USD2 million or more (depending on their sector of business activity), branches of foreign companies, subsidiaries and QIPs.

Registered taxpayers make monthly and annual tax filings. Taxpayers may be subject to the taxes outlined below.

Tax on Income (TOI)

TOI is 20%, including for companies. For resident taxpayers, tax is on income from both domestic and foreign sources. For non-resident taxpayers, tax is levied only on income from domestic sources. The tax rate on income from oil and gas production sharing contracts and other natural resource exploitation is 30%, and for certain insurance activities, it is 5%.

Minimum Tax (MT)

MT is 1% of annual turnover. The taxpayer pays either TOI or MT, whichever is greater. Taxpayers may qualify for an MT exemption if they meet certain record-keeping requirements. QIPs may also receive exemption from MT if they meet certain auditing requirements.

Prepayment of Tax on Income (PTOI)

PTOI is 1% of the monthly turnover and is a prepayment of TOI and may be offset against the annual TOI payable.

Value Added Tax (VAT)

VAT is set at 10% for the provision of most goods and services. Registered entities that charge VAT may offset the VAT they pay for goods and services against the VAT they charge.

There are some non-taxable goods and services, such as:

• education;
• medical services and incidental supplies;
• insurance services;
• primary financial services;
• supply of utilities, sanitation and waste disposal services; and
• certain agricultural products.

For investors who export goods and services, and for other specific sectors such as supporting industries to the garment, footwear and textile industries, as well as some other goods and services supporting the agro-industry, VAT is zero-rated. QIP usually has VAT exemption for the import of materials to produce for export.

VAT on e-commerce activities by non-residents (such as online retail services, online advertising, data and other online consumption) is collected by the user taxpayer by a reverse-charge mechanism. For services not consumed by registered taxpayers, the e-commerce supplier must register with the Cambodian taxation authorities and declare and pay the VAT.

Withholding Tax (WHT)

Resident to a resident

Payments by a resident taxpayer to another Cambodian resident are subject to the following withholdings:

• services (unless the service provider is VAT registered) – 15%;
• royalties – 15%;
• interest payments (except to/by domestic banks) – 15%; and
• rental payments (unless to a VAT registered entity) – 10%.

Resident to a non-resident

For services, royalties, interest, rentals, dividends and some other activities – 14%. The WHT rate may be reduced according to the terms of any applicable double tax agreement (DTA).

Advanced Tax on Dividend Distributions (ATDD)

For pre-TOI dividend distributions, calculated according to a set formula.

Tax on Salary (TOS)

As Cambodia does not have Personal Income Tax (PIT), employers are obliged to withhold tax on salary at progressive rates up to a maximum of 20%

Other Specific Taxes and Deductions

In Ethiopia, there are other taxes and deductions that apply to specific things, as follows:

• fringe benefits tax (FBT) – 20% on certain fringe benefits for employees
• specific tax – 3% to 35% excise on specific goods and services (eg, imported liquor – 35%; airline tickets – 10%; telecoms services – 3%)
• accommodation tax – 2% on hotel room charges and services
• public lighting tax – 3-5% tax on sales of alcohol and cigarettes
• property rental tax – 10% of the rental income
• annual land tax – 0.1% of 80% of the value over USD25,000
• unused land tax – 2% of the market value assessed by the tax authority
• stamp duty – 0.1% for share transfers and 4% for means of transportation and for immovable property transfers and transfers of shares representing immovable property; and
• capital gains tax (CGT) – 20% on non-real estate assets (subject to deductions).

Dividends and interest paid to foreign investors are subject to WHT. WHT is an indirect tax on the recipient; however, the obligation to collect and remit the WHT is on the payer, ie, the taxpayer. The WHT for dividends and interest varies depending on the tax-residency status of the recipient. Except for WHT on interest payable on bank accounts, WHT obligations for payments by a resident taxpayer to another Cambodian resident are as follows:

• services (unless the service provider is VAT registered and provides a valid VAT invoice) – 15%;
• royalties – 15%;
• interest payments (except to/by domestic banks) – 15%; and
• rental payments (unless to a VAT registered entity with a valid VAT invoice) – 10%.

WHT obligations for payments by a resident taxpayer to a non-resident for services, dividend distributions, interest, royalties and rent are all subject to 14% WHT.

WHT rates may be reduced under a DTA, in accordance with the DTA’s terms. For example, most DTAs entered into between Cambodia and other countries (such as China, Hong Kong, Indonesia, Macao, Malaysia, Singapore, South Korea and Vietnam) reduce WHT on services, dividends, royalties and interest from 14% to 10%.

Investors may mitigate their tax liabilities by minimising their footprint in the jurisdiction and minimising high-value taxable transactions. For example, a foreign investor may:

• choose an asset purchase from a local target rather than a share purchase, so as not to assume any existing tax liabilities;
• choose to set up a special purpose investment vehicle in a third country as a conduit for the investment and avail themselves of any favourable DTA rates and treatments (such as Singapore); and
• get QIP status with either tax deferrals of up to 9 years and other tax exemptions or special accelerated depreciation of capital expenditures and assets as well as other tax exemptions.

Investors may also choose loan financing over equity financing for subsidiaries, provided that the loans comply with the required documentation, such as a proper loan agreement, a documented business case for the loan and board resolutions. Shareholders’ loans or loans from related parties are subject to transfer pricing review and the interest on such loans is subject to WHT, especially for payments to non-residents.

Foreign investors may avail themselves of the general depreciation rates and methods and may also carry forward losses for up to five years.

The Cambodian tax authorities have robust audit mechanisms and broad powers that can result in substantial tax reassessments. Investors may be subject to:

• desk audits at any time within 12 months of submitting a tax return;
• limited audits conducted at the site of the taxpayer’s business and of the monthly tax returns for the current and immediately preceding tax year; and
• comprehensive audits examining TOI returns and other tax obligations for the current and previous three tax years.

A comprehensive audit can be extended to cover up to ten years of taxation obligations. Taxpayers can minimise the frequency of and disruptions caused by such audits by obtaining a special gold or silver compliance status.

In Ethiopia, capital gains are taxable as follows:

• ordinary capital gains of a taxpayer are subject to TOI; and
• capital gains made by other physical persons resident in Cambodia and non-residents are subject to 20% CGT for capital such as leases (including financial leases), investment assets, goodwill, IP rights and foreign currency.

Investors subject to CGT may deduct actual expenses from the amount of the taxable gain.

Note that CGT is applicable to gains on the sale of worldwide assets for resident taxpayers, and only on the gains on the sale of Cambodian assets for non-residents. The implementation of CGT on immovable properties for physical persons has been deferred until 2027.

Cambodian transfer pricing (TP) regulations require related party transactions to be conducted at arm’s length and properly documented. A party is a related party if:

• it is an entity that controls another entity;
• if it is controlled by another entity; or
• it is a party to a transaction in which both parties are under the common control of another entity.

Control means ownership of 20% or more equity or voting power in the related entity. Related party transactions (“controlled transactions”) must adhere to the arms-length principle, meaning that the price of the transaction must be similar to the price of the transaction if it were conducted between independent parties.

The related party taxpayer must compare the conditions of the controlled transaction with those of independent transactions (“comparability analysis”). The TP comparability analysis must be conducted using one or more of the five mechanisms, including:

• comparable uncontrolled price;
• resale price method;
• cost plus method;
• transactional net margin method; and
• profit split method.

Related party taxpayers must provide evidence and documents for each such method used and must keep detailed TP documentation. Related party transactions must be reported together with the annual TOI return. The taxation authority has the power to make TP adjustments to redistribute gross income, deductions or other benefits between related parties. Such adjustments may result in additional tax plus penalties.

The employment and labour framework in Cambodia is principally governed by the Constitution, the 1997 Labour Law and its subsequent amendments, as well as a wide range of implementing regulations issued by the Ministry of Labour and Vocational Training (MLVT) and the Arbitration Council. Collectively, these instruments establish the minimum legal standards that employers must comply with and aim to safeguard the rights and interests of employees, who are generally considered to have weaker bargaining power in the employment relationship. The MLVT is the primary authority responsible for monitoring, administering, and enforcing compliance with labour-related legislation across all sectors.

Labour unions and collective bargaining are legally recognised under the 2016 Law on Trade Unions. Unionisation is common and active in the garment, footwear, and travel goods sectors, where collective bargaining agreements are regularly negotiated. In other industries (such as services, retail and hospitality), unions exist but are less prevalent. Cambodia does not have works councils; however, enterprises with at least eight employees must elect Shop Stewards as worker representatives.

Foreign investors should be aware that Cambodia imposes several key labour compliance obligations on all enterprises operating in the jurisdiction. These include:

• managing foreign employees through annual quota approval and obtaining work permits and employment cards for all foreign employees;
• registering the enterprise and all employees with the MLVT’s online systems and the National Social Security Fund (NSSF), with monthly contributions;
• preparing required employment documentation, including written contracts and internal regulations for enterprises with eight or more employees;
• complying with occupational safety and health standards, including mandatory medical check-ups;
• observing sector-specific minimum wage rules; and
• maintaining proper employee records and fulfilling periodic labour reporting duties.

Employee compensation is primarily cash-based, including salaries, bonuses, and allowances, supplemented by statutory benefits such as annual leave, public holidays, maternity leave, sick leave and mandatory contributions to the NSSF covering healthcare, workplace accidents and pensions. In the context of an acquisition, change of control, or other investment transactions, existing employment contracts and compensation arrangements generally remain in effect, with the new employer assuming all rights and obligations, including payment of wages, benefits, and accrued entitlements.

In the event of a company acquisition or change of control, employees are entitled to continue their employment with the new employer. All existing employment contracts remain fully in effect, meaning the new employer assumes all rights and obligations under them, including:

• payment of wages; provision of benefits; and
• recognition of accrued entitlements.

If the new employer decides to terminate any employees, they must comply with statutory requirements regarding notice periods and other payments as prescribed under the 1997 Labour Law. Cambodia does not have a works council system or mandatory collective bargaining requirements that must be satisfied to complete an acquisition or investment transaction.

However, if a union or shop steward is present within the enterprise, the employer may have an obligation to inform or consult these employee representatives regarding significant changes affecting the workforce, particularly where the transaction may involve:

• restructuring;
• modification of working conditions; or
• potential termination.

While these consultations or information requirements do not prevent the transaction from proceeding, failure to comply may increase the risk of labour complaints or disputes being raised before the MLVT or other competent authorities.

Cambodia does not apply an investment-screening system in which IP plays a determining role. Under the 2021 Law on Investment of Cambodia and its implementing regulations, the CDC reviews investment proposals mainly on economic contribution, compliance with sectoral requirements and eligibility for incentives. Whether an investor owns a particular patent, trademark, or technology is not, in itself, a factor affecting approval.

That said, IP-related issues may surface indirectly in certain sectors. Activities involving pharmaceuticals, broadcasting technologies, software or highly specialised manufacturing may prompt regulators to question the origin or legitimacy of the technology being used. This is not to evaluate the IP as part of the investment application, but rather to ensure that the operation complies with industry rules and safety requirements.

Cambodia’s intellectual property framework has developed significantly over the past decade. As a World Trade Organisation (WTO) member, the country is bound by the TRIPS Agreement and has enacted laws covering:

• trademarks;
• patents; industrial designs;
• utility models;
• copyrights;
• geographical indications;
• plant varieties; and
• integrated circuits.

Cambodia’s participation in the Patent Cooperation Treaty (PCT), Madrid Protocol, and Hague System has also made registration procedures more practical for foreign investors.

In most sectors, obtaining and maintaining IP protection, for example, trademarks, is straightforward, though some practical obstacles remain. Patent applications may take time to be examined, as Cambodia does not conduct substantive examinations but has adopted a very flexible approach and has signed several patent validation agreements with foreign patent offices. Copyright enforcement for digital content, software and entertainment remains difficult due to limited enforcement resources and widespread piracy. Trade secret protection is available through general civil and criminal rules, as Cambodia has not yet adopted a dedicated trade secrets law. For pharmaceuticals, compulsory licensing remains a theoretical possibility under TRIPS, though it has not been heavily used in practice. IP protection for works generated by artificial intelligence is not addressed in current laws and regulations, meaning that the human element of creativity remains essential.

Even with these challenges, Cambodia’s legal framework aligns with regional norms, and enforcement continues to improve progressively through government cooperation with WIPO and other international partners.

Cambodia has not yet adopted a single, comprehensive data protection law. Instead, data-related obligations are scattered across sector-specific laws, including the e-commerce, telecommunications and banking laws. These instruments generally require companies in these sectors to handle data confidentially and implement security measures.

The current laws do not have an extraterritorial reach. Foreign companies only need to comply with Cambodian requirements when they operate or process data within the country. Enforcement varies depending on the sector, with financial and telecoms regulators taking a stricter approach. Penalties are generally fixed amounts or administrative sanctions, rather than heavy multipliers that exceed actual economic harm. However, businesses should expect compliance requirements to strengthen once Cambodia finalises its draft data protection law, which is currently under development.