New Property Tax

In January 2011, the Ministry of Economy and Finance implemented a new property tax which applies to all immoveable property worth more than 100 million riel (USD$25,000). This is in addition to existing taxes such as Tax on Unused Land, Registration Tax and Tax on Land and House Rent. The law follows the establishment of a Property Valuation Committee (PVC) which is responsible for property valuation in relation to the new law.

Any property subject to the tax will be issued with a Tax Identification number and the taxpayer will be required to file and pay the tax before 30 September each year. Each property requires a separate return. The amount owing will be assessed as 0.1% of the value in excess of the amount specified. No declaration is necessary for properties valued below this. If a taxpayer makes alterations to the property which may reduce its value for the purpose of the tax, the responsibility of notifying the PVC lies with the taxpayer.

“Immoveable property” is defined very broadly as applicable to land (both used and unused), housing and building and constructions (including those without walls or roofs). This means that anything fixed to land will have its value considered for the purpose of the tax.

Foreign investors may be caught by the definition of taxpayer, which includes occupiers and final beneficiaries as well as owners. Careful consideration needs to be paid to tax liability when negotiating leases and other rental arrangements to make ensure ultimate liability does not end up resting with a lessee or tenant. Purchasers also need to be cautious that taxes to date have been paid, or they may end up with the responsibility for unpaid taxes on the property – under the regulation, liability rests with the owner at the time tax is due.The tax was implemented following the International Monetary Fund’s recommendation that Cambodia increase revenues from tax collection to open up resources for development needs in the wake of the global economic crisis.