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The Continuation and Additional Tax Incentives for Real Estate Sector for 2025

Introduction

Following the Royal Government’s decision in the Special Statement on “One Year Achievement of the 7th Legislature” on August 22, 2024, and the directive of Samdech Thipadei Prime Minister of Cambodia on September 26, 2024, regarding Letter No. 10571 MEF dated September 24, 2024, from the Ministry of Economy and Finance, aimed at reducing the tax burden on housing developers and immovable property owners, the Ministry of Economy and Finance announces the continuation of Notification No. 001 (issued on January 4, 2024) and additional tax incentives for the real estate sector, as outlined below.

Key provisions

The 2025 tax incentives for the real estate sector include exemptions on (A) Tax on Stamp Duty of Transferring Ownership or Possession of Immovable Property, (B) Tax on Capital Gain, (C) Tax on Immovable Property, and (D) Tax on Unused Land, as detailed in following:

A. Tax on Stamp duty for Transferring Ownership or Possession of Immovable Property. (The tax rate is 4%[1])

Tax on stamp duty is exempt for transferring ownership or possession of all types of Borey housing valued at USD 70,000 or less until the end of 2025. For all type of Borey housing valued over USD 70,000, the stamp duty tax is calculated by subtracting USD 70,000 from the base value. This also applies to houses purchased in development projects and Borey housing that have a valid real estate business license and are properly registered, until the end of 2025. All ownership or possession transfers with the above exemptions and tax concessions must comply with these conditions:

  • Acquisition of ownership or possession of immovable property with a value of less than or equal to or more than USD 70,000 at the actual market value stated in the contract of sale-purchase from February 25, 2020, to the end of 2025 and to declare stamp duty during this period;

  • Acquisition of ownership or possession of immovable property (all types of housing) from a housing developer registered with the Ministry of Economy and Finance (Now as Real Estate Business and Pawnshop Regulator of Non-Bank Financial Services Authority) or Provincial Department of Economy and Finance; and

  • All housing developers must make a proper sale-purchase contract based on the actual market price. If necessary, the General Department of Taxation under the Ministry of Economy and Finance may review housing developers who have taken the opportunity to reduce the sale and purchase price from the actual market, affecting tax revenue.

    • The taxpayer must enclose the actual sale-purchase contract between the housing developer and the buyer (as original documents) in addition to the application for stamp duty on the transfer of ownership or possession of immovable property.

     B. Tax on Capital Gain. (The tax rate is 20%[2])

    The tax on capital gain of immovable property for individuals is postponed until the end of 2025. Tax on the other five asset types—leases, investment assets, business reputation, intellectual property, and foreign currency—will commence in 2025.

    C. Tax on Immovable Property (The annual tax rate is 1%[3])

  • Tax on immovable property, including administrative penalties (additional tax and interest), is exempt for immovable property or any part of immovable property classified as agricultural land, where crops are being cultivated, or constructions directly and permanently support agricultural activities. This applies to land in the capitals and provincial cities, if the land documents confirm it as agricultural, without needing a permit letter or certificate from the competent authority. However, if any part of the land is used for construction houses, buildings, or other structures unrelated to agricultural activities, that portion will not qualify for the tax exemption.

  • Immovable property with a title deed as a residential land in the capital or provincial cities used for cultivation qualifies for immovable property tax exemption, but it requires a permit letter or certificate of agricultural land use from the local authority.

  • Immovable property that was previously registered and declared but has an incorrect tax basis is exempt from re-taxation and administrative penalties (additional tax and interest) from the year of tax implementation until 2024. From 2025 onward, current laws and regulations will apply.

  • Immovable property (with or without a title deed) not previously registered and declared for immovable property tax can still be registered and pay taxed starting from the year of possessed or last use. For immovable property previously registered but with gaps in tax declarations, administrative penalties (additional tax and interest) are waived until the end of June 2025.

    • D. Tax on Unused Land (The annual tax rate is 2%[4])

    Tax on unused land is suspended until the end of 2024, so owners, possessors, or beneficiaries are not required to declare the tax on unused land during this time. In 2025, the Ministry of Economy and Finance will introduce a new unused land tax policy with significant changes as follows:

  • Land classified as unused refers to land outside taxable immovable property areas;

  • Deduction Allowance: Each plot of land will have a 5-hectare tax-free allowance; and

  • Land over 5 hectares can be exempt from taxes if it meets any of the following conditions: actively cultivated agricultural land, used for registered economic activities, leased land, government-owned land, state-leased land for economic use, land in Special Economic Zones (SEZs), or land registered for educational purposes.


    • Conclusion

    To ease the burden on housing developers and property owners, the Ministry of Economy and Finance has introduced tax incentives, including exemptions on the 4% Stamp Duty Tax for Borey housing valued at $70,000 or less until 2025, postponed 20% Capital Gains Tax for individuals until 2025, and 0.1% immovable property tax exemptions for agricultural land actively used for cultivation or related structures, with penalties for incorrect tax bases waived until 2024 and gaps in declarations forgiven until June 2025. Additionally, the 2% Unused Land Tax is suspended until 2024, with a 2025 policy offering a 5-hectare tax-free allowance and exemptions for specific uses, such as agriculture, economic activities, and education. These measures promote real estate growth while ensuring compliance, excluding retroactive application to taxes already paid.

    If you are looking for reliable tax advice in Cambodia, ILAW CAMBODIA offers expert legal guidance and comprehensive regulatory support to ensure your business stays fully compliant while efficiently managing tax risks. With our deep knowledge of Cambodia’s tax laws and regulations, we help you navigate complexities with confidence. Let us be your trusted partner in turning challenges into opportunities and driving the success of your business in Cambodia.

    Author: Tanadee Pantumkomon and Hort Lypheng

    Footnotes

    [1] Article 158 Point 1 of the Law on Taxation 2023.

    [2] Article 168 of the Law on Taxation 2023.

    [3] Article 150 of the Law on Taxation 2023.

    [4] Article 176 of the Law on Taxation 2023.

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