Tax on Salary (TOS) and Fringe Benefit Tax
Tax on Salary (TOS)
Term Salary
The term Salary is defined to include basic remuneration, wages, bonuses, overtime, and other compensations.
Physical person resident
The tax on salary is a monthly tax imposed on salary that has been received within the framework of fulfilling employment activities. A physical person resident in the Kingdom of Cambodia is liable to the tax on salary for Cambodian source salary and foreign source salary.
Residency
An individual is considered a resident for tax purposes if they fulfill any one of the following criteria:
(1) their residence is in Cambodia; or
(2) their principal place of abode is in Cambodia; or
(3) they are present in Cambodia for more than 182 days in any period of 12 months ending in the current tax year.
For a resident employee the tax on salary due is determined on the monthly taxable salary and is withheld according to the progressive tax rate as below:
| Monthly salary (Riels) | Rate |
| 0 – 1,200,000 | 0% |
| 1,200,001 – 2,000,000 | 5% |
| 2,000,001 – 8,500,000 | 10% |
| 8,500,001 – 12,500,000 | 15% |
| 12,500,001 – upwards | 20% |
Tax on salary will be paid as follows.
| Salary Tax Calculation Base Range | Rate | Tax on Salary will be paid. |
| 0-1,200 ,000 | 0% | 0 |
| 1,200 ,001 -2,000 ,000 | 5% | Salary Tax Calculation Base x 5% – 60,000 |
| 2,000 ,001 -8,500,000 | 10% | Salary Tax Calculation Base x 10% – 160,000 |
| 8,500,001 -12 ,500,000 | 15% | Salary Tax Calculation Base x 15% – 585,000 |
| 12 ,500,001 and over | 20% | Salary Tax Calculation Base x 20% – 1,210,000 |
Non-Resident Physical Person
A non-resident physical person is liable to the tax on salary for Cambodian source salary.
For a non-resident employee the tax on salary is withheld at the rate of 20% of the amount to be paid before withholding. This withholding tax is the final tax on salary for the non-resident receiving the salary.
Deductions
Deductions for dependent family members reduce the monthly taxable base on which TOS is calculated. A deduction of KHR 150,000 per month may be deducted for each minor dependent child under 14, or under 25 and in full-time education, and a deduction for the same amount for one non-working spouse. The term “recognised educational institution” is not defined in the tax regulations. In practice, most schools in Cambodia should be covered by this term. Dependent minor children must have a proper birth certificate.
Payment Time
The enterprise which is the employer of an employee has the obligation to withhold tax before salary payment and pay this tax to the tax administration by the 20th of the month following the month in which the salary is paid.
Fringe Benefit Tax
For fringe benefits, every month, the employer shall withhold and pay tax at the rate of 20% of the total value of fringe benefits given to all employees. The value of fringe benefits is the fair market value inclusive of all taxes.
Fringe Benefits are as follows.
- Excessive or unnecessary cash allowances
- Contributions to a pension plan ( unless such contributions are not more than 10% of the employee’s monthly basic salary). Contribution to a pension plan in excess of 10% of the employee’s monthly salary (exclusive of
fringe benefit) is considered as fringe benefit subject to ToFB. - Entertainment or recreational expenditure (may also be non-deductible expense for income tax purpose).
- Private use of motor vehicles
- Food
- Accommodation support ( including utilities and domestic helpers)
- Low-interest loans and discounted sales.
- Education assistance ( unless related to the employment).
- Health and life insurance premiums ( unless the same benefits are provided to all employees). Life and health insurance premiums provided to employees are exempt from ToFB if the same benefits are provided equally to all employees regardless of employment or job classification.
Exempt Tax on Salary and Fringe Benefit Tax
- NSSF (National Social Security Fund) or social welfare fund contributions are required by law
- Infant allowance or nursery expenses in accordance with the Labour Law
- Salaries of members of the National Assembly and Senate
- Some uniform entitlements
- health or life insurance premiums provided to all employees. Life and health insurance premiums provided to employees are exempt from ToFB if the same benefits are provided equally to all employees regardless of employment or job classification.
- Meal allowances provided to all employees.
- Salaries of certain employees of approved diplomatic, international and aid organizations.
- Salaries of non-resident employees subject to certain conditions.
- some redundancy payment
- Accommodation support in accordance with the Labour Law. For example, Company sent its staff to work in the provinces. Company has a policy to provide its staff a mission allowance (including travel,meals and accommodation) for such assignments. If flat allowances provided to employees for mission and travel expenses that are comparable to the government allowances provided for similar work are exempt from ToS and ToFB.
- reimbursement of employee-related expense
- Some travel allowances
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