Payroll and Employment Taxes in Cambodia

What You Need to Know About Payroll Taxes in Cambodia

If you’re running a business in Cambodia, whether a small local company or a larger international operation, understanding payroll taxes is essential. Employers are responsible for withholding and remitting various types of taxes on behalf of their employees, including income tax, social security contributions, and other statutory levies. These obligations ensure compliance with Cambodian law and help fund important national programs.

Managing payroll taxes can be complex, especially for foreign companies navigating Cambodian regulations for the first time. Mistakes can lead to fines, strained employee relationships, and reputational risks. This article will help you break down the essentials of payroll in Cambodia, covering the main tax types, calculations, deadlines, and filing procedures, so you can pay employees smoothly and compliantly.

Fiscal Year in Cambodia

1 January - 31 December is the 12-month accounting period that businesses in Cambodia use for financial and tax reporting purposes.

Payroll Cycle in Cambodia

The payroll cycle in Cambodia is usually monthly, with employees being paid on or before the last working day of the month.

Bonus Payments in Cambodia

In Cambodia, there is no statutory requirement for a 13th-month salary.

Types of Payroll Taxes in Cambodia

Employers in Cambodia need to comply with several types of payroll-related taxes, each with its own requirements and deadlines. Here are the most common ones:

Withholding Tax on Salary (Personal Income Tax)

Employers must withhold tax on employees’ monthly salaries based on Cambodia’s progressive tax brackets. This ensures employees pay the correct personal income tax to the General Department of Taxation (GDT). The withheld tax is then remitted by the employer. Deadlines are strict, usually the 15th of the following month, and penalties for late filing or payment include fines and interest charges.

Social Security Fund (NSSF) Contributions

The National Social Security Fund (NSSF) covers healthcare, occupational risks, and pensions. Both employers and employees contribute, with employers generally paying a larger share. Contributions must be reported and remitted monthly. Non-compliance not only triggers penalties but also denies employees access to essential benefits, which can damage employer credibility.

Fringe Benefits Tax

Non-cash benefits such as housing, cars, or allowances are subject to specific taxation. Employers must calculate the taxable value of these benefits and apply the relevant rate. Filing deadlines usually align with monthly salary tax submissions, and underreporting benefits can trigger audits and retroactive penalties.

How to Pay Employees in Cambodia

Beyond taxes, employers need to understand the practicalities of paying workers in Cambodia. Most salaries are paid via bank transfer directly into an employee’s Cambodian bank account. Salaries are required to be paid in the local currency, the Cambodian riel (KHR), although some contracts specify partial payment in USD depending on sector practices.

Payments are typically made monthly, with wages due by the end of the month or by the 10th of the following month. Employers must issue payslips that clearly outline gross pay, deductions, and net pay. For foreign employers, compliance requires either setting up a local entity, engaging an Employer of Record (EOR), or working with a payroll provider.

• Payment method: Bank transfer is standard; cash payments are rare.
• Currency: Salaries are typically paid in Cambodian riel (KHR).
• Frequency: Usually monthly, payable by month-end or by the 10th of the following month.
• Foreign employers: Must establish a local entity or partner with an EOR/payroll provider.
• Payslips: Must show gross salary, tax withholdings, contributions, and net pay.

How to Set Up Payroll in Cambodia

Getting payroll right from the start is crucial in Cambodia. Correct setup ensures compliance with labor and tax laws, protects the business from penalties, and builds employee trust. Employers need to register their business with the tax authorities, enroll employees in the NSSF, and set up internal payroll systems or engage a local payroll provider.

• Register your business with the General Department of Taxation (GDT).
• Enroll employees in the National Social Security Fund (NSSF).
• Classify employees correctly and apply the correct tax brackets.
• Set up systems to calculate, withhold, and remit taxes accurately.
• Keep payroll records for the required statutory period.

Example of Salary Tax Calculation

If an employee earns KHR 2,000,000 per month, the salary tax is calculated using progressive rates. For example, income under KHR 1,300,000 may be exempt, with the remainder taxed progressively at 5%, 10%, or higher depending on brackets. Employers must apply the correct rates each month.

Submitting Employee Tax in Cambodia

Employers can remit taxes and contributions through:

• Online filing: Via the GDT’s e-filing system.
• Bank payment: Authorized banks can process payroll-related tax payments.
• In-person submission: Filing directly at the tax office (less common for larger companies).

Payroll Tax Due Dates in Cambodia

Payroll and Employee Tax Contributions in Cambodia

Understanding the tax obligations for both employers and employees is crucial when operating in Cambodia's business landscape. This section explains how taxes and statutory fees affect payroll and individual earnings in Cambodia.

Employers must manage contributions to the NSSF, ensure accurate withholding of salary taxes, and correctly account for fringe benefits. Employees rely on these withholdings for compliance and to access benefits like healthcare, pensions, and insurance. Failure to manage these obligations risks penalties for the employer and reduced trust from employees.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 5.4% on top of the employee salary in Cambodia.

Employee Payroll Tax Contributions

In Cambodia , the typical estimation for employee payroll contributions cost is around 2%.

Individual Income Tax Contributions

In Cambodia, individual income tax is calculated based on progressive rates ranging from 0% to 20% as follows:

Pension in Cambodia

Companies with employees must register with the National Social Security Fund (NSSF). To get pension benefits, one must be at least 60 years old, registered in the NSSF pension scheme, and have contributed for at least 12 months. Pension contributions are based on monthly earnings, capped at KHR 1,200,000.

Ready for Payroll That Fits Your Workflow?

Make better business decisions by consolidating global payroll data, while seamlessly syncing your existing payroll operations.

• Instantly integrate outsourced and in-house payroll.
• Interactive variance analysis to prevent errors.
• Create custom reports and access in-depth analytics.

Book a Demo

Managing Common Payroll Challenges in Cambodia

Global employers operating in Cambodia often encounter unique payroll challenges that can affect compliance and efficiency, like navigating evolving tax laws and managing employee data. With a need for real-time accuracy, modern organizations must develop strategies to overcome these challenges effectively. Below, we explore some of the most common payroll hurdles and provide actionable solutions to streamline payroll processes in Cambodia.

Maintaining Accurate and Detailed Payroll Reports

Maintaining accurate global payroll reports is often challenging due to currency exchange complexities, data integration issues, and the need to keep employee information up-to-date – including tax information, hours worked, leave balances, and any changes in salary or job status. Generating accurate reports is easy with a comprehensive payroll automation tool that consolidates fragmented data sources, and can keep track of employee payments and deductions.

Keeping Up With Ever-Changing Tax Laws & Compliance Laws

In Cambodia, tax laws and compliance regulations can change frequently, presenting a significant challenge for global employers. Monitoring updates to federal, state, and local tax codes is crucial to avoid non-compliance and costly penalties, but requires significant time and resources. Partnering with local experts or a reputable global HR platform is an effective way to maintain compliance. These services can help employers stay compliant with evolving regulations while freeing up time for more strategic work.

Consolidating Multi-Vendor Payroll Analytics

Managing payroll across multiple vendors often leads to fragmented data and inefficiencies, making it difficult to consolidate analytics. These challenges can hinder decision-making, especially when trying to gain a clear view of workforce costs and trends. To address this, organizations can invest in a centralized payroll management system that unifies data from multiple vendors. A consolidated platform simplifies payroll tracking, ensures data accuracy, and provides actionable insights into payroll expenditures.

Integrating Multiple HR & Payroll Systems

Global companies are prone to using multiple HR or payroll systems across regions, which can easily lead to fragmented payroll data, increasing the risk of delays and errors in employee compensation. To combat this, seamless integration between payroll and other systems is critical.

Payroll management systems that connect with existing HR and financial platforms can help streamline workflows by reducing manual inputs and ensuring that all departments operate with up-to-date, accurate information. In turn, this helps guarantee on-time, accurate payroll, boosting employee satisfaction.

What Does a Global Payroll Management Platform Cover?

A global payroll management platform is a software solution designed to streamline and automate the payroll processes for organizations with employees across multiple countries. It helps ensure accurate and timely payment while maintaining compliance with legal and regulatory requirements in Cambodia.

Key functions of a payroll management platform can include:

• Consolidate payroll data: Streamline fragmented payroll data into one source of truth when you’re operating in multiple regions.
   
• Analytics and reporting: Advanced capabilities to analyze payroll data and generate automated reports per region.
   
• Monitor and standardize payroll: Get an accurate view of employee costs, bonuses, and taxes per region, catch variances, and standardize payroll processes across regions to minimize errors.
   
• Compliance and record-keeping: Maintains accurate payroll records and ensures adherence to labor laws and regulations, reducing the risk of legal issues.
   
• Employee self-service: Provides portals where employees can access pay stubs, update personal information, and manage benefits selections.

How Playroll Can Streamline Payroll & Taxes in Cambodia

Expanding globally is an exciting milestone for any company, but it comes coupled with complex payroll challenges. It doesn’t have to be complicated. At Playroll, our easy-to-implement global payroll management software combines automation with hands-on support to make global payroll truly simple. Here's how Playroll helps:

• Multi-Vendor Integration: Our platform syncs seamlessly with your providers and in-house systems to unify global payroll services in one platform.
   
• Standardize Payroll Processes: Unify your operations in one dashboard to ensure payroll is running smoothly globally, with advanced approval flows and reports.
   
• Improve Governance & Compliance: Improve compliance by centralizing all your compliance tasks and processes. Easily track your payment obligations, with digitized audit trails.
   
• Advanced Reporting: Access and configure your data, your way, with a comprehensive suite of payroll analytics and reporting tools.