How to start a business in Cambodia as a foreigner ?
Starting a business in Cambodia as a foreigner is relatively straightforward, thanks to the country’s investor-friendly policies and growing economy. However, there are specific steps and regulations to follow in order to establish a legal business. Below is a step-by-step guide on how to start a business in Cambodia as a foreigner.
Step 1: Choose the Type of Business Entity
Foreigners can set up several types of business entities in Cambodia. The most common types are:
- Private Limited Company (PLC)
- The most popular option for foreigners.
- Can have one or more shareholders.
- Shareholders are only liable for the amount they invest in the company.
- Foreigners can own 100% of a PLC, except in certain sectors where local ownership is required.
- Representative Office
- Suitable for foreign companies that wish to establish a presence in Cambodia without directly engaging in trade or business activities (i.e., for marketing, liaison, or market research).
- Not allowed to generate revenue or sign contracts on behalf of the parent company.
- Branch Office
- A branch office of a foreign company can be set up in Cambodia, but it needs approval from the Cambodian Ministry of Commerce (MOC) and other relevant agencies.
- The branch office can engage in business activities and generate revenue.
- Partnership (CV)
- Foreigners may form a Commanditaire Vennootschap (CV), which is a limited partnership with at least one general partner (unlimited liability) and one or more limited partners (limited liability). This type of entity is not as common for foreign investors.
Step 2: Choose a Business Name and Reserve It
- The company name must be unique and cannot conflict with existing companies.
- You can reserve the business name online through the Ministry of Commerce (MOC).
- It’s important to check if the name is available through the MOC’s online system.
Step 3: Prepare the Required Documents
For a Private Limited Company (PLC), you’ll typically need the following documents:
- Company Name Reservation: Certificate from the Ministry of Commerce.
- Articles of Association: These will define the company’s structure and operations, and are signed by the shareholders.
- Shareholder Details: Information on shareholders (at least one) and their contributions.
- Directors: Details of at least one director (foreign directors are allowed).
- Registered Address: Proof of the registered office address in Cambodia.
- Passport or Identification: Copies of passports for foreign shareholders and directors.
- Capital: Minimum paid-up capital (in practice, you may need about $1,000 USD for smaller businesses, but higher amounts are required for businesses in certain sectors).
Step 4: Register the Company
- Ministry of Commerce (MOC)
- Submit the necessary documents (Deed of Establishment, Articles of Association, shareholder and director details, etc.) to the Ministry of Commerce for registration.
- The Ministry of Commerce will process the registration and issue the Certificate of Incorporation.
- This process can take around 1-2 weeks.
- Obtain the Business Registration Certificate
- After the MOC approves your documents, you will receive a Certificate of Incorporation, which officially registers your company.
- You will also receive a Business Registration Certificate (TDP – Tanda Daftar Perusahaan).
- Tax Registration (TIN)
- Apply for a Taxpayer Identification Number (TIN) with the General Department of Taxation (GDT) to register your business for tax purposes.
- You’ll also need to register for VAT if your company’s turnover is expected to exceed KHR 250 million (~$60,000 USD) annually.
Step 5: Open a Corporate Bank Account
Step 6: Obtain Necessary Licenses and Permits
Step 7: Register for Social Security and Employment Insurance
- If you plan to hire employees, you must register your company with the National Social Security Fund (NSSF), which provides healthcare, pensions, and accident insurance for employees.
- This registration is compulsory for businesses with employees.
Step 8: Comply with Labor Laws
- Ensure compliance with Cambodia’s labor laws by setting up employment contracts, work permits for foreign staff (if applicable), and maintaining workplace safety standards.
- If you employ foreign workers, you must apply for work permits and residence permits (K-visa).
Step 9: Ongoing Compliance and Reporting
- Tax Filings: You will need to file monthly tax returns (including VAT, withholding tax, etc.) and submit annual financial statements.
- Annual Audits: Some businesses may need to undergo audits if they meet certain criteria, such as larger businesses or those with foreign investment.
- Licensing Renewal: Certain licenses and permits need to be renewed annually or periodically.
Step 10: Start Operations
Once your business is registered, you are free to start operations. Be sure to follow the local rules and regulations, particularly regarding employment, taxes, and permits.
Key Points to Consider:
- Foreign Ownership: Cambodia allows 100% foreign ownership for most businesses, except in restricted sectors such as banking, media, aviation, and land ownership. In these sectors, you may need to partner with a local Cambodian shareholder.
- Minimum Capital Requirements: The minimum capital required for a Private Limited Company (PLC) is generally USD 1,000 for small businesses, but for foreign-invested businesses or more capital-intensive sectors, the requirements can be higher (e.g., USD 100,000 for larger operations).
- Tax System: Cambodia operates a flat corporate income tax rate of 20%. Tax incentives and exemptions may be available for certain industries, particularly those that are in priority sectors for investment (such as manufacturing or tourism).
- Local Partner: While Cambodia allows 100% foreign ownership in many sectors, it’s advisable to have a local partner or legal advisor for navigating local regulations and cultural nuances.
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Professional Advice: It is highly recommended to seek assistance from a local business consultant, lawyer, or accountant to ensure that you meet all legal requirements and avoid costly mistakes.
If you are looking to register a new business in Cambodia. We are here to help you.
We offer free consultation.
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