The General Department of Taxation (“GDT“) has issued new guidance under Instruction No. 18574 GDT dated 17 June 2025 regarding the tax implications of share premium following concerns raised by taxpayers and Chambers regarding inconsistent interpretations during tax audits.

This clarification follows Article 7 of the Law on Taxation (Royal Kram No. NS/RK/0523/004, dated 16 May 2023) and Prakas No. 578 MEF.P.GDT (dated 19 September 2024), reinforcing the legal foundations for determining taxable income in Cambodia.

What’s New?

The GDT confirms that:

1. Share premium is not taxable income.
It is considered a capital contribution from shareholders and therefore excluded from the income tax base.

2. However, documentation is critical.
Enterprises must ensure that both share capital and share premium are:

• Fully paid into the business;
• Clearly recorded in accounting records;
• Supported by proper documentation, such as share subscription agreements and bank remittance records.

Caution: Where records are incomplete or missing, the GDT reserves the right to recharacterize capital injections as taxable income, exposing the enterprise to potential tax liabilities.

Click on this link to read DFDL Cambodia’s Case Study on the calculation of Share Premium: https://www.dfdl.com/insights/legal-and-tax-updates/cambodia-clarification-on-the-tax-treatment-of-share-premium/

Tax services required to be undertaken by a licensed tax agent in Cambodia are provided by Mekong Tax Services Co., Ltd, a member of DFDL and licensed as a Cambodian tax agent under license number – TA201701018