Prakas 192 on Taxation of Trusts - Unofficial Translation and Commentary from IAO Asia

Important Clarification on Cambodia’s Taxation of Trusts Issued by MOEF (Prakas No. 192, Dated 12 March 2025)

Overview

The Ministry of Economy and Finance issued Prakas No. 192 on 12 March 2025, clarifying and establishing the tax rules and compliance obligations for trusts operating in Cambodia. This framework applies to trustors, trustees, and beneficiaries—both residents and non-residents.

Key Points:

1. Trust Registration

• Trustees (companies) must register as medium or large taxpayers.

• Trustees (licensed individuals) must register as small, medium, or legal taxpayers.

• Registration must occur within 15 working days of starting activities or receiving regulatory approval.

2. Accounting and Compliance

• Trustees are required to:

  • Keep separate accounting records for each trust.

  • Clearly separate personal assets from trust assets.

  • Adhere to the 2023 Law on Taxation accounting rules.

3. Tax Obligations

• Income Tax (TOI): Trustees pay tax on fees they receive—not on the trust assets.

  • Rates: 20% for companies; 0–20% progressive rate for individuals or partnerships.

• Rental Income: If a trust property generates rent, this is taxable.

• Capital Gains Tax (CGT): Profits from selling or transferring trust assets are taxable.

• Stamp Duty: Applied on ownership or possession transfers of trust property.

• Withholding Tax (WHT): Applies to income paid to non-residents unless CGT already applies.

Key Considerations for Legal and Tax Professionals:

A. Compliance

• Detailed and segregated financial reporting is mandatory for each trust.

• Tax agents and legal teams must ensure timely registration, accurate tax filings, and compliance with multiple tax types.

B. Taxable Events

• Trust income is narrowly defined—only trustee remuneration is taxed directly.

• Legal professionals should assess whether income qualifies for exemptions under existing rules.

C. Cross-Border Issues

• WHT implications for non-resident beneficiaries require analysis of double tax treaties and potential overlaps with CGT.

Conclusion

Prakas No. 192 significantly clarifies how trusts are to be taxed in Cambodia. It establishes formal structures for compliance, reporting, and taxation that align with international norms. Companies should consult with their accounting and legal advisors to ensure that they are registered properly, meet accounting standards, and fulfill all tax obligations on time.

For a full English translation of Prakas 192, please download IAO Asia’s unofficial translation of the complete Khmer text at the link below.

Prakas 192 On Measures and Procedures for Tax Compliance for Trusts - Unofficial Translati.

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