Cambodia has emerged as one of Southeast Asia’s most dynamic business destinations, attracting entrepreneurs and investors with its growing economy, strategic location, and increasingly business-friendly environment. In 2025, setting up a business in the Kingdom offers significant opportunities—but also requires careful navigation of bureaucratic processes, legal requirements, and cultural considerations.
This comprehensive guide walks you through everything you need to know about establishing a business in Cambodia, from choosing the right legal structure to understanding tax obligations and navigating the practical realities of doing business in this rapidly developing nation.
Why Cambodia? The Business Case in 2025
Before diving into the mechanics of business registration, it’s worth understanding why Cambodia continues to attract entrepreneurs and investors despite regional competition.
Strategic Location: Cambodia sits at the heart of mainland Southeast Asia, bordered by Thailand, Vietnam, and Laos. Its position within ASEAN provides access to a market of over 600 million consumers. The country’s ports, particularly Sihanoukville, offer maritime access connecting to global trade routes.
Young Population: With a median age of approximately 26 years, Cambodia offers a growing workforce and expanding consumer market. The population of over 17 million is increasingly urbanized, with Phnom Penh alone housing nearly 3 million residents.
Economic Growth: Despite global economic headwinds, Cambodia’s economy has shown resilience with steady GDP growth. The government has prioritized diversification beyond garment manufacturing into sectors like tourism, agriculture, construction, and digital services.
Dollarization: Cambodia’s economy is highly dollarized, with US dollars widely used alongside the Khmer riel. This reduces currency exchange risks for foreign businesses and simplifies international transactions.
Digital Transformation: The country has embraced digital technology, with high smartphone penetration, growing e-commerce adoption, and government digitalization initiatives. This creates opportunities in fintech, e-commerce, digital services, and technology sectors.
Preferential Trade Access: Cambodia enjoys preferential trade agreements with major markets, including the Everything But Arms agreement with the EU (though with some recent modifications) and various ASEAN trade arrangements.
Understanding Business Structures in Cambodia
Choosing the appropriate legal structure is your first critical decision. Cambodia offers several business entity types, each with distinct characteristics, requirements, and implications.
Private Limited Company
The Private Limited Company (Ltd.) is the most common structure for foreign-owned businesses in Cambodia. This structure offers limited liability protection, meaning shareholders’ personal assets are generally protected from business debts and liabilities.
Key characteristics:
- Minimum one shareholder (individual or corporate)
- Minimum one director (can be the same person as shareholder)
- No minimum capital requirement legally, though banks may require certain capital levels
- Can be 100% foreign-owned in most sectors
- Suitable for small to medium enterprises
- Annual financial audits required for companies above certain revenue thresholds
Public Limited Company
Public Limited Companies (Plc.) are designed for larger enterprises and those planning to raise capital through public share offerings. These are less common for small businesses and startups.
Key characteristics:
- Minimum three shareholders required
- Minimum three directors required
- Higher compliance and reporting requirements
- Subject to additional securities regulations if publicly traded
- More complex governance structures
Branch Office
Foreign companies can establish branch offices in Cambodia, which are extensions of the parent company rather than separate legal entities.
Key characteristics:
- Not a separate legal entity; the parent company bears full liability
- Must be registered with the Ministry of Commerce
- Subject to annual registration renewal
- Often used by companies testing the Cambodian market before full commitment
- Limited ability to engage in activities beyond the parent company’s scope
Representative Office
Representative offices allow foreign companies to establish a presence for market research, liaison activities, and business promotion without engaging in commercial activities.
Key characteristics:
- Cannot generate revenue or sign contracts in Cambodia
- Suitable for market research and relationship building
- Lower compliance requirements than branch offices
- Must be renewed annually
- Often used as a stepping stone before establishing a full company
Sole Proprietorship
Cambodian citizens can register as sole proprietors, a simple structure suitable for small businesses. However, foreign nationals cannot directly register sole proprietorships and must use company structures.
Partnership
Partnerships involve two or more individuals conducting business together. General partnerships involve shared liability, while limited partnerships allow for passive investors with limited liability.
Foreign Ownership Restrictions: What You Need to Know
While Cambodia is generally open to foreign investment, certain sectors have ownership restrictions or special requirements.
Restricted Sectors:
- Land Ownership: Foreign individuals and entities cannot own land in Cambodia. However, foreigners can own up to 49% of units in stratified buildings (condominiums) from the second floor up, and can lease land on long-term bases (typically 15-50 years, renewable).
- Media and Broadcasting: Foreign ownership in broadcasting is restricted or prohibited
- Telecommunications: Requires special licenses with specific ownership structures
- Legal Services: Law firms must have Cambodian lawyer partners meeting specific requirements
- Rice Milling: Restrictions on foreign ownership exist to protect domestic industry
- Certain Professional Services: Medical practices, accounting firms, and other professional services have specific licensing requirements
Sectors Requiring Special Licenses:
- Banking and financial services
- Insurance
- Education institutions
- Healthcare facilities
- Tourism-related businesses (in some cases)
- Import/export businesses
Investment Incentives: The Council for the Development of Cambodia (CDC) and Cambodian Investment Board (CIB) offer incentives for qualifying investments, including tax holidays and import duty exemptions, particularly for:
- Export-oriented manufacturing
- Supporting industries (automotive parts, electronics components)
- Agricultural processing
- Tourism infrastructure
- Skills training and technology development
Step-by-Step Business Registration Process
The process of registering a business in Cambodia has been streamlined in recent years, though patience and attention to detail remain essential.
Step 1: Name Reservation
Begin by reserving your company name through the Ministry of Commerce’s Business Registration Department.
Process:
- Submit three proposed company names (in order of preference)
- Pay the name reservation fee (approximately $25-50 USD)
- Receive approval typically within 1-3 business days
- Reserved names are valid for 30 days
Naming requirements:
- Must not be identical or too similar to existing registered companies
- Cannot include restricted words without authorization (Royal, National, Bank, etc.)
- Must include the appropriate designation (Ltd., Plc., etc.)
Step 2: Prepare Required Documents
Gather and prepare all necessary documentation:
For Private Limited Companies:
- Completed application form
- Articles of Incorporation (company charter)
- Passport copies of all shareholders and directors
- Proof of registered office address (lease agreement or property ownership document)
- Memorandum of Association (if multiple shareholders)
- Letter of appointment for directors
- Company stamp design
Additional for Foreign Shareholders/Directors:
- Notarized and authenticated passport copies
- If corporate shareholders: certificate of incorporation, memorandum and articles, board resolution authorizing investment
Step 3: Ministry of Commerce Registration
Submit your completed application and documents to the Ministry of Commerce.
Timeline: Typically 5-10 business days for approval
Costs:
- Registration fees vary based on capital and business type
- Basic registration: approximately $300-500 USD
- Additional fees for authenticated copies
What you receive:
- Certificate of Incorporation
- Patent (Business Registration Certificate)
- Articles of Incorporation with official stamp
Step 4: Tax Registration
Register with the General Department of Taxation (GDT) within 15 days of company registration.
Required documents:
- Certificate of Incorporation
- Articles of Incorporation
- Identification documents for directors and shareholders
- Registered office lease agreement
- Completed tax registration forms
You will receive:
- Tax Identification Number (TIN)
- VAT certificate (if applicable)
Step 5: Register with Ministry of Labor
If you plan to hire employees, register with the Ministry of Labor and Vocational Training.
Requirements:
- Submit company registration documents
- Register workplace with labor inspector
- Obtain internal regulation approval if employing 8+ workers
Step 6: Obtain Business Licenses and Permits
Depending on your business activities, you may need sector-specific licenses:
Common licenses:
- Patent tax registration (all businesses)
- VAT registration (if annual turnover exceeds threshold)
- Import/export license (trading companies)
- Tourism license (travel agencies, hotels, restaurants)
- Construction license (construction companies)
- Health permits (food businesses, restaurants)
- Environmental compliance (manufacturing, processing)
Step 7: Social Security Registration
Register with the National Social Security Fund (NSSF) if you have employees.
Coverage includes:
- Occupational risk insurance
- Health insurance
- Pension schemes (being phased in)
Employer contributions: Approximately 2.6% of gross salary for work injury insurance and 2.6% for health insurance
Step 8: Banking and Financial Setup
Open a corporate bank account, which is essential for business operations.
Major banks serving businesses:
- ACLEDA Bank
- ABA Bank
- Canadia Bank
- ANZ Royal Bank
- Vattanac Bank
- BRED Bank
Requirements typically include:
- Certificate of Incorporation
- Articles of Incorporation
- Passport copies of directors and authorized signatories
- Proof of business address
- Board resolution authorizing account opening
- Initial deposit (varies by bank, typically $500-5,000 USD)
Understanding the Cost Structure
Starting a business in Cambodia requires upfront investment beyond the basic registration fees.
Initial Setup Costs (Approximate):
- Company registration: $300-500
- Legal and consulting services: $500-2,000
- Registered office (serviced office): $150-500/month
- Business licenses (varies by sector): $50-500+
- Professional accounting setup: $300-800
- Company stamp/seal: $10-30
- Initial capital requirement (bank dependent): $1,000-10,000
Ongoing Operational Costs:
- Patent tax (business license): $200-1,000+ annually (based on revenue)
- Accounting and tax compliance: $150-500+ monthly
- Office rent: $300-3,000+ monthly (depending on location and size)
- Employee salaries (including contributions): $200-1,000+ per employee monthly
- Utilities and internet: $100-300+ monthly
- Professional services (legal, consulting): Variable
Total estimated initial setup: $3,000-15,000 USD depending on business complexity and sector
Tax Obligations: What You’ll Pay
Understanding Cambodia’s tax system is crucial for business planning and compliance.
Corporate Income Tax
Standard rate: 20% on taxable profit (revenue minus allowable expenses)
Minimum tax: 1% of annual turnover (payable even if the company operates at a loss)
Payment: Monthly prepayments based on estimated annual profit, with annual reconciliation
Value Added Tax (VAT)
Standard rate: 10% on goods and services
Threshold: Registration required if annual turnover exceeds approximately $62,500 USD
Zero-rated supplies: Exports and certain international services
Exempt supplies: Certain financial services, education, healthcare, and public transport
Withholding Tax
Applied to various payments made by Cambodian entities:
- Dividends: 0% (paid to residents), 14% (paid to non-residents)
- Interest: 15%
- Royalties: 15%
- Service fees: 15%
- Rental income: 10%
Salary Tax (Personal Income Tax)
Progressive rates applied to employee salaries:
- Up to $1,500/month: 0%
- $1,500-$2,000: 5%
- $2,000-$8,500: 10%
- $8,500-$12,500: 15%
- Above $12,500: 20%
Employers are responsible for withholding and remitting salary tax monthly.
Property Tax
Applied to properties with value exceeding $100,000:
- Residential: 0.1% of property value
- Commercial: May vary
Specific Tax
Applied to certain goods and services:
- Petroleum products
- Cigarettes and tobacco
- Entertainment services
- Telecom services
Employment Law and Hiring
Hiring employees in Cambodia involves compliance with the Labor Law and various regulations.
Employment Contracts
Requirements:
- Written contracts required for fixed-duration and undetermined-duration employment
- Contracts must specify: job description, salary, working hours, workplace
- Probation period maximum: 3 months for employees, 2 months for workers
- Available in Khmer language
Working Hours and Conditions
- Standard: 8 hours/day, 48 hours/week
- Overtime: Maximum 2 hours/day
- Overtime pay: 150% for normal days, 200% for weekly rest days, higher for public holidays
- Paid annual leave: Minimum 18 days after 1 year of service
- Public holidays: Approximately 28 days annually
Minimum Wage
Minimum wages vary by sector:
- Garment and footwear sector: $200/month (2025)
- Other sectors: No official minimum, but typically $200-250/month starting range
Termination and Severance
Notice periods:
- Probation: 1 day advance notice
- Regular employment: 7 days to 3 months depending on seniority
Severance pay:
- Termination without cause: 5 days wages per year of service for first 2 years, then 7 days per year for years 3-6, then 10 days per year for years 7+
- Alternative: 15 days wages per year of service (if chosen by employer)
Foreign Workers
Foreign nationals require work permits to be employed in Cambodia.
Requirements:
- Valid passport and visa
- Employment contract
- Work permit application through Ministry of Labor
- Health certificate
- Police clearance
- Processing time: 2-4 weeks
- Validity: Typically 1 year, renewable
- Cost: Approximately $100-150
Visa and Immigration Considerations
Entrepreneurs and business owners need appropriate visa status to operate in Cambodia.
Business Visa (E-Class)
Most foreign business owners use E-class business visas:
- Single entry: $35 (valid 30 days upon entry)
- Multiple entry extensions available: 1, 3, 6, or 12 months
- Can be extended indefinitely while business is active
- Extensions: $45-300 depending on duration
Long-term Business Visa
After obtaining E-class visa, extend to:
- EB (business): Most common for business owners/employees
- EG (long-stay): For investors meeting capital thresholds
Work Permit
Separate from visa, required for employment:
- Obtained after securing employment
- Requires health check and documentation
- Annual renewal required
Accounting and Compliance Requirements
Maintaining proper accounting and meeting compliance obligations is mandatory for all businesses in Cambodia.
Accounting Standards
- Cambodia adopts Cambodian International Financial Reporting Standards (CIFRS)
- Based on International Financial Reporting Standards (IFRS)
- Proper bookkeeping required for all transactions
- Records must be maintained for 10 years
Financial Statements
Required annual financial statements:
- Balance sheet
- Income statement (profit and loss)
- Cash flow statement
- Notes to financial statements
Auditing Requirements
- Companies above certain thresholds must have annual audits
- Audit threshold varies (consult current regulations)
- Must use licensed auditor registered in Cambodia
- Audit report submitted with annual tax declaration
Monthly and Annual Obligations
Monthly:
- Salary tax withholding and payment
- VAT declaration and payment (if registered)
- Prepayment tax on profit
Quarterly:
- Prepayment tax reconciliation
Annually:
- Annual tax return (due within 3 months of fiscal year-end)
- Audited financial statements (if required)
- Patent tax renewal
- Business registration renewal (for branches/representative offices)
- Work permit renewal
Practical Considerations for Success
Beyond legal requirements, several practical factors contribute to business success in Cambodia.
Location Matters
Phnom Penh: The capital offers the best business infrastructure, largest market, and access to government offices. Consider areas like BKK1 (Boeung Keng Kang), Toul Kork, or Chamkarmon for business districts.
Siem Reap: Tourism-focused businesses thrive here with access to Angkor Wat visitors, though the market is smaller and more seasonal.
Sihanoukville: Previously promoted for manufacturing and port businesses, but recent Chinese casino development has complicated the business environment.
Other provinces: Lower costs but less developed infrastructure and smaller markets.
Banking Challenges
While Cambodia’s banking system has improved, challenges remain:
- International transfers can face delays and scrutiny
- Anti-money laundering compliance is strict
- Maintaining required minimum balances
- Documentation requirements for transactions
- Consider maintaining accounts with multiple banks for flexibility
Language and Communication
- English is widely spoken in business contexts in Phnom Penh and Siem Reap
- Khmer language skills are valuable for deeper market penetration
- Translation services often necessary for legal documents
- Cultural communication differences require adaptation
Business Culture
Understanding Cambodian business culture improves success:
- Personal relationships matter significantly
- Face-saving is culturally important
- Patience required for bureaucratic processes
- Hierarchical business structures common
- Business entertainment and relationship building valued
Technology Infrastructure
- Good internet connectivity in major cities (fiber optic expanding)
- Mobile penetration high; mobile-first market
- E-commerce infrastructure developing rapidly
- Digital payment systems expanding (ABA Pay, Pi Pay, Wing)
- Cloud services and international platforms accessible
Common Challenges and How to Overcome Them
Every entrepreneur faces obstacles when establishing a business in Cambodia. Being prepared helps navigate these challenges.
Bureaucratic Delays
Challenge: Administrative processes can be slower than expected, with unofficial delays sometimes occurring.
Solutions:
- Work with experienced local agents or law firms
- Build buffer time into planning
- Maintain positive relationships with officials
- Ensure all documentation is complete and accurate
- Consider expediting services where available
Property and Office Space
Challenge: Finding appropriate commercial space at reasonable rates with clear legal terms.
Solutions:
- Work with reputable real estate agents
- Carefully review lease terms
- Consider serviced offices initially for flexibility
- Verify landlord ownership documentation
- Include clear termination clauses in leases
Talent Acquisition and Retention
Challenge: Finding skilled employees, particularly for specialized roles, and managing high turnover.
Solutions:
- Offer competitive compensation packages
- Invest in training and development
- Create positive work culture
- Provide clear career progression paths
- Consider regional recruitment for senior positions
Infrastructure Limitations
Challenge: Power outages, internet disruptions, road conditions, and logistics challenges.
Solutions:
- Invest in backup power (generators, UPS systems)
- Use redundant internet connections
- Plan logistics with buffer time
- Build flexibility into operations
- Locate near better infrastructure areas
Legal and Regulatory Uncertainty
Challenge: Regulations can change, be ambiguous, or be inconsistently enforced.
Solutions:
- Maintain relationships with qualified legal counsel
- Join business associations for updates and advocacy
- Network with other business owners
- Stay informed about policy changes
- Build compliance cushions into operations
Professional Services and Support
Leveraging professional services can significantly smooth the business setup process.
Legal Services
International and local law firms in Cambodia can assist with:
- Business structure selection
- Company registration
- Contract drafting and review
- Intellectual property protection
- Compliance advisory
- Labor law matters
Major firms include: DFDL, Conventus Law, VDB Loi, Tilleke & Gibbins
Accounting and Tax Services
Professional accounting firms handle:
- Monthly bookkeeping
- Tax compliance and filing
- Payroll processing
- Financial statement preparation
- Audit services
Major firms include: PwC, Deloitte, KPMG, EY, and numerous local firms
Business Consulting and Services
Various consultancies offer:
- Market research
- Business plan development
- Company registration services
- Visa and work permit assistance
- HR and recruitment services
Banking and Financial Services
Beyond traditional banking, consider:
- Payment processing services
- Foreign exchange management
- Business loan facilities
- Trade finance services
Chambers of Commerce and Business Associations
Valuable for networking, advocacy, and information:
- Cambodia Chamber of Commerce
- EuroCham Cambodia
- AmCham Cambodia
- Australian Business Association Cambodia
- Singapore Business Association Cambodia
- Sector-specific associations (Garment, Tourism, etc.)
Digital Business Opportunities in 2025
Cambodia’s digital economy presents unique opportunities for entrepreneurs in 2025.
E-commerce
The e-commerce sector is experiencing rapid growth:
- Rising smartphone and internet penetration
- Growing consumer confidence in online shopping
- Social commerce (Facebook, Instagram) extremely popular
- Opportunity for niche platforms and services
- Last-mile delivery challenges creating opportunity for logistics solutions
Fintech and Digital Payments
Financial technology is transforming Cambodia:
- Digital wallet adoption growing (Wing, ABA Pay, Pi Pay)
- Limited traditional banking penetration creates leapfrog opportunity
- Remittance services significant market
- Blockchain and cryptocurrency interest growing (though regulatory landscape evolving)
Digital Services
Service sector digitalization offers opportunities:
- Software development and IT services
- Digital marketing agencies
- Content creation and management
- Online education platforms
- Telemedicine and health tech
Mobile-First Solutions
With high mobile penetration, mobile-first businesses thrive:
- Mobile app development
- Mobile content services
- Mobile commerce platforms
- Location-based services
Sustainability and Social Impact
Increasingly, businesses in Cambodia are incorporating sustainability and social impact into their models.
Social Enterprise
Cambodia has a growing social enterprise ecosystem:
- Businesses addressing social or environmental problems
- B-Corp certification available
- Consumer interest in ethical consumption growing
- Impact investment funding available from specialized funds
Environmental Considerations
Environmental consciousness is rising:
- Plastic reduction initiatives gaining traction
- Renewable energy opportunities (solar particularly viable)
- Sustainable tourism concepts
- Waste management solutions needed
- Green building and sustainable construction
Corporate Social Responsibility
Many businesses integrate CSR:
- Community development projects
- Education sponsorships
- Environmental initiatives
- Skills training programs
Exit Strategies and Long-Term Planning
While focused on launch, consider eventual exit or transition strategies.
Selling the Business
- Establish clear ownership documentation from start
- Maintain clean financial records
- Build transferable systems and processes
- Consider early planning for succession or sale
Closing a Business
If business closure becomes necessary:
- De-register with Ministry of Commerce
- Cancel tax registration with GDT
- Settle all tax obligations
- Clear labor obligations with employees
- Notify social security authorities
- Close bank accounts after all obligations settled
Conclusion: Your Cambodian Business Journey
Setting up a business in Cambodia in 2025 offers exciting opportunities in a dynamic, growing economy. While the process involves navigating bureaucracy, understanding regulations, and adapting to a different business culture, thousands of foreign entrepreneurs have successfully established thriving businesses in the Kingdom.
Success requires:
- Thorough preparation: Research your market, understand regulations, and plan carefully
- Professional support: Leverage legal, accounting, and consulting services
- Patience and flexibility: Things may not move as quickly as in more developed markets
- Cultural adaptation: Respect and work within Cambodian business culture
- Long-term perspective: Building a successful business takes time and persistence
- Compliance focus: Maintain proper legal and tax compliance from day one
Cambodia’s young population, growing middle class, strategic location, and increasingly sophisticated business environment create a compelling case for entrepreneurs willing to navigate the challenges. The country’s rapid development means opportunities exist across sectors—from traditional businesses like restaurants and retail to cutting-edge tech startups and social enterprises.
As you embark on your business journey in Cambodia, remember that you’re not just starting a company—you’re becoming part of a nation’s remarkable transformation story. With preparation, professional guidance, and cultural sensitivity, your business can thrive while contributing to Cambodia’s continued development.
Welcome to the Kingdom of Wonder. Your business adventure awaits.