MEF Introduces Income Tax Incentives for Expanding Investment Projects

• 5 June 2024
• Uncategorized
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The Ministry of Economy and Finance (MEF) has issued new guidelines to provide income tax incentives for the expansion of qualified investment projects (EQIP), as outlined in Prakas No. 313 MEF.PrK.PD dated 10 May 2024. This move aims to stimulate economic growth by encouraging investment in various sectors.

According to the Prakas, the incentive period for income tax exemption applies to:

1. Projects expanding their existing production;
2. Diversifying production targets within the same product line, or;
3. Installing new technologies that enhance productivity or protect the environment;
4. For other types of expansion activities, government approval is required.

The regulation details the eligibility criteria and procedures, stating that the EQIP income tax exemption will be granted based on the original project’s investment activity type, as specified in the sub-decree on the implementation of the Investment Law of Cambodia. (Read more)

Upon receiving permission to expand IPQ activities from the CDC, the General Department of Taxation will issue a certificate of income tax exemption to the EQIP.

However, exemptions will not be granted if:

1. The enterprise fails to use the capital to expand the IPQ;
2. Does not invest in new construction materials and production facilities as proposed, or;
3. Does not fulfil its tax obligations according to Cambodian tax laws and regulations.

This new policy underscores Cambodia’s commitment to creating a favourable investment climate and boosting economic development by supporting the growth and diversification of local and foreign investment projects.

• Laws and Regulation