Company Registration in Cambodia- An Overview
Cambodia is located in the south East Asian province between the countries of Vietnam, Laos and Thailand. This country is famous for its cultural heritage and religion. The famous temple of Angkor Watt is one of the oldest and largest religious complexes in the world. This temple was built during the Khmer empire rule. All the above aspects make it beneficial for an entrepreneur to carry out business in Cambodia. Due to this, an investor must go for company registration in Cambodia.
The main activities carried out in Cambodia include forestry, agriculture and tourism. In 2014 the country accounted for more than 4 million tourists. Apart from these sectors, the textiles and garments sectors are booming in Cambodia. Exports of garments and textiles bring in a lot of revenue for Cambodia.
Company Registration in Cambodia is quite straightforward; as it requires minimum of one director and two shareholders. There is no requirement for physical presence of a foreigner to incorporate a company in Cambodia. Hence it is quite simple to carry out business in Cambodia.
Tourism is one of the prominent sectors which attract tourists from all over the world. In fact, Tourism itself has contributed to about more than 10 % of the GDP. To promote sustainable development, the government has developed the concept of eco-tourism which attracts more foreigners. An investor should consider all the above factors and go for company registration in Cambodia.
The government has introduced the scheme related to Qualified Investment Project (QIP). Under this scheme, there are lot of incentives for resident companies in Cambodia which include exemption from corporate tax for a period of nine years, duty free subsidies on equipment and other forms of activities. Apart from this depreciation is allowed up to 35% on the value of new assets and equipment.
Benefits of Company Registration in Cambodia
The following are the benefits of company registration in Cambodia:
- Tourism Sector
The tourism industry is booming in Cambodia with majority of revenue contributing to the GDP from this sector. In fact, Tourism itself has contributed to about more than 10 % of the GDP. To promote sustainable development, the government has developed the concept of eco-tourism which attracts more foreigners. More than 10% of the country GDP is dependent on tourism and other forms of allied activities.
- Agriculture Sector
Another sector which is concentrated in Cambodia is the agriculture sector. Agriculture crops such as Rice, Corn, Sugarcane, Coconut and Cassava are grown in this country. Cultivation of these crops adds to the revenue generation in Cambodia.
- Government Scheme
The government has introduced the scheme related to Qualified Investment Project (QIP). Under this scheme, there are lot of incentives for resident companies in Cambodia which include exemption from corporate tax for a period of nine years, duty free subsidies on equipment and other forms of activities. Apart from this, depreciation is allowed up to 35% on the value of new assets and equipment.
- Diverse Culture and Tradition
Cambodia is known for its diverse culture and tradition. The famous temple of Angkor Watt is one of the oldest and largest religious complexes in the world. This temple was built during the Khmer empire rule. This attracts tourists from all over the world.
- Oil and Gas Reserves
There are ancient oil and gas reserves present in Cambodia which is one of the most interesting fact to development of tourism. Due to this an investor must go for company registration in Cambodia.
Eligible Business Structures for Company Registration in Cambodia
The following are eligible business structures for company registration in Cambodia:
- Limited Liability Company
The liability of this form of entity is limited to the initial amount of investment. There is no personal liability of the shareholders. This form of entity is the most utilised form of business structure in Cambodia. The minimum capital to form this form of entity is KHR 4 million (about USD 1,000). Usually an investment provided by foreign investor is accepted by the Council for the Development of Cambodia (CDC). This type of business organisation is flexible based on the needs of the members and directors. There are three forms of limited liability company which include:
• Private LLC
• Public LLC
• Single Member LLC.
- Branch Office
A branch office is a mere extension of the foreign parent company. The liability of the branch office would come under the foreign parent company. There is no principle of separate legal entity. The liability of this form of entity would fall on the foreign parent company. Activities which are carried out by the branch office are usually taxed in Cambodia.
- Representative Office
A representative office is a mere extension of the foreign parent company. This form of entity acts as a local representative of the foreign parent. The main advantage of forming this type of company is fast approval from the government authorities. Apart from this, any profit making activities are not taxed in Cambodia.
Minimum Eligibility Criteria for Company Registration in Cambodia
The following criterion has to be sufficed for company registration in Cambodia:
The Company must appoint an agent to carry out the activities in Cambodia. This agent must represent the partnership or the company in carrying out the affairs. The agent must be a competent individual (natural person) who is resident of Cambodia.
- Registered Place of Business
The Company must have a physically registered office to carry out business. This is one of the requirements for company registration in Cambodia.
- Maintain Records
In accordance with the rules of the Law on Commercial Enterprises, all companies have to maintain records in the registered place of business. The following records have to be maintained:
• Annual Accounts
• Minutes of the Meeting
• Copies related to all notices on the company
• Incorporation Documents.
- Use of Khmer Name
An applicant going for company registration in Cambodia must use a Khmer name. If the applicant is a foreign company and wants to display a name in another language, then the name in Khmer must also be displayed. The name in Khmer must be larger than the other name. In all documents and official letter heads of the company, the name must be displayed in Khmer language.
- Company Secretary
The Company must appoint a company secretary to carry out all the formalities related to company.
Procedure for Company Registration in Cambodia
The following procedure must be utilised for company registration in Cambodia:
- Fill Up Information Online
As per Article 5 of the Sub decree of Business Registration through Information Technology System, an applicant for company registration in Cambodia. After this, all attachments must be uploaded in the system. The applicant can also ask a representative to fill in the information on the online system. Information and documents must be uploaded in the following website.
- Online Documents
All the information must be submitted online for business registration process. This must be carried out in electronic format, and transferred to the respective ministries to complete the business registration. In case incorrect information is provided is incorrect, then the ministry would have to notify the applicant regarding the same.
- Reviewing Application
As per Article 8, after the ministry receives the application they would review the application. It would take three working days for the ministry to receive the application. If there are no inconsistencies with the application, then the Ministry of Commerce would provide the certificate to the applicant. The certificate would be provided in the digital format. If the applicant wants a physical copy of the same then the same can be printed out.
- Tax Registration
After the Ministry of Commerce provides the certificate, the Ministry of Tax and Ministry of Finance would review the documents provided by the applicant. After this the digital registration of tax would be granted to the applicant. Along with this the patent certificate, certificate of tax registration (value added tax-VAT), tax registration identification card would be provided to the applicant.
- Bank Account
After 15 working days, the applicant must provide the corporate bank account information to the certificate of tax registration (value added tax-VAT), tax registration identification card.
- Review by the Ministry of Labour
The Ministry of Labour and Vocational Training would review the whole process after the applicant secures the Business Registration and Tax Registration. This ministry would provide an administrative number to the applicant for company registration in Cambodia. The administrative number would be a token of acceptance that the company is registered. This would be carried out within one working day. Suppose the above has not been carried out in one day, then it is deemed that the business has started.
- Council of Development of Cambodia (CDC)
If the project is not included in the negative list, then after 20 days the CDC would verify the authenticity of the documentation.
Compliances for Company Registration in Cambodia
The following compliances have to be mandatorily followed by a company in Cambodia:
- Board of Directors Meeting
The Board of directors’ meetings must be held at least once every three months. This would be applicable for all companies in Cambodia.
- Submission of Annual Declaration
The annual declaration of the company must be submitted every year. This would be submitted to the MOC (Ministry of Commerce) indicating the status of the company.
- Financial Statements
Annual Financial statements have to be published in accordance with the requirements of MOC. This must be carried out 21 days before the shareholders meeting.
- Corporate Tax Rate
The rate of corporate tax is 20%. For oil and gas companies the rate is 30%.
The following documents are required for company registration in Cambodia:
- Lease agreement of the premises
- Memorandum of Association
- Articles of Association
- Passport Information and Visas of the Directors
- Photo Of the Directors ( which are not older than three months)
- Letter of Appointment of the Director for the branch office and representative office
- Licenses provided by the respective ministries