Do I Need a Local Entity to Hire in Cambodia?

In Cambodia, a "local entity" refers to a recognized business presence, such as a subsidiary or branch office, that allows you to act as an employer. This setup is essential for fulfilling local payroll and employment obligations, ensuring compliance with Cambodian labor laws.

Without a local entity, you generally cannot manage payroll, withhold taxes, or provide compliant employment contracts. However, using an Employer of Record (EOR) can be a viable alternative, allowing you to hire employees without establishing a local entity.

What is Required to Employ Someone in Cambodia?

• Local employing entity required to directly employ? Yes (you need a local entity to manage payroll and compliance)
• Payroll registration required? Yes (mandatory for tax and social security compliance)
• Withholding/tax remittance required? Yes (employers must withhold and remit income tax)
• Social contributions required? Yes (employers are responsible for social security contributions)
• Local employment agreement required? Yes (written contracts are mandatory under Cambodian law)
• Mandatory benefits to budget? Yes (includes annual leave, sick leave, and other statutory benefits)
• Works council/collective agreements considerations? Usually (some sectors may have collective agreements affecting employment terms)

Best Options If You're Hiring in Cambodia

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but you should be cautious about misclassification risks.

Hiring contractors in Cambodia can be a straightforward option, but it’s essential to ensure that the contractor relationship does not resemble employment. Misclassification can lead to legal issues, as Cambodian law provides strong protections for employees. Here are key points to consider:

• Ensure contractors operate independently and are not integrated into your business.
• Be mindful of how much control you exert over their work, as this can indicate an employment relationship.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in Cambodia, depending on the type of business and required registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated 1,000,000–2,500,000 KHR per month ($250–$625)
• Payroll provider: Estimated 200,000–500,000 KHR per employee per month ($50–$125)
• Employer registrations and recurring compliance: Estimated 500,000–1,000,000 KHR per year ($125–$250)
• Corporate tax filings and annual reporting: Estimated 1,000,000–2,000,000 KHR per year ($250–$500)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 p/month with Playroll)
• Pass-through statutory costs (e.g., employer social security contributions, typically around 1% of gross salary)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Cambodia

Hiring in Cambodia can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Cambodia quickly without establishing a local entity, eliminating incorporation costs, ongoing administration, and exit complexity.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s managed payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.