Notification on the Continuation and Expansion of Tax Incentives for the Real Estate Sector

The Ministry of Economy and Finance (“MEF“) issued Notification No. 014 on the Continuation and Expansion of Tax Incentives for the Real Estate Sector dated 9 October 2024 (“Notification no. 014“). Notification no. 014 continues the implementation of Notification no. 001 of MEF dated 4 January 2024 and provides additional tax incentives for the real estate sector. These tax incentives provided under the Notification no. 014 are as follows:

A) Stamp Duty Exemption on the Transfer of Immovable Property                              

1. Stamp duty tax exemption on the transfer of ownership or possessory rights of all types of houses in the gated communities (commonly known as “Borey” in Cambodia) that have value of under or equal to US$70,000 until the end of 2025; and
2. Stamp duty tax relief on the transfer of ownership or possessory rights of all types of houses in the Borey that have value more than US$70,000 by allowing a deduction of US$70,000 from the stamp duty tax base for houses purchased from housing development projects in the form of Borey, that hold a real estate business license and have been properly registered, until the end of 2025.

In order to qualify for the exemptions mentioned above, the following conditions must be met:

1. The relevant Sale and Purchase Agreement (“SPA“) must be dated between 25 February 2020 to 31 December 2025. The value of the immovable property in the SPA should be reflective of its market value, and a stamp tax declaration must be filed during this period;
2. The immovable property must be acquired from a residential development company registered with MEF (under the Real Estate Business and Pawnshop Regulator) or the provincial department of economy and finance; and
3. In case the value of the property in the SPA does not reflect its market value, the General Department of Taxation (“GDT“) reserves the right to inspect and reassess the value of the property.

B) Capital Gains Tax

Implementation of the capital gains tax from immovable properties is delayed until end of 2025. However, the implementation of the capital gains tax from leases, investment assets, goodwill, intellectual property and foreign currencies will be implemented starting from 2025.

C) Tax on Immovable Properties

1. Immovable properties located in capital cities and provincial cities with ownership title or letter of transfer of possessory rights that certify that the properties are agricultural land and are currently cultivated are exempt from tax on immovable properties, including administrative penalties (i.e. additional tax and interest). However, if any portion of those immovable properties is utilized for the construction of a house, building, or other construction that does not directly and permanently support the agricultural activities, that portion will not qualify for the tax exemption.
2. Immovable properties located in capital cities and provincial cities with ownership title or letter of transfer of possessory rights that certify that the properties are residential land but are used for agricultural purposes shall be exempted from tax on immovable properties, provided these properties have a letter of consent or certified letter on the use of agricultural land from the local authorities.
3. Immovable properties that have been registered and declared for tax on immovable property with incorrect tax base are exempted from tax reassessment including administrative penalties (i.e. additional tax and interest) until the end of 2024. From 2025 onwards, the registration and declaration of tax on immovable property must be in accordance with the laws and regulations in force.
4. Immovable properties with ownership title or letter of transfer of possessory rights that have never been registered and for which the tax on immovable property has not been declared are allowed to be registered and have the tax on immovable property paid for from the year the properties have been in possession or from the year the last beneficiary was in possession of the immovable properties. The payment of this tax on immovable properties is exempted from administrative penalties (i.e. additional tax and interest) until the end of June 2025.
5. For the immovable properties that have been registered and for which the tax on immovable property has been declared, but for which the tax has not been paid in any years, are exempted from administrative penalties (i.e. additional tax and interest) until the end of June 2025.

D) Tax on Unused Land

The implementation of the tax on unused land has been delayed until the end of 2024, which means that the land’s owner, occupant, or last beneficiary has no obligation to declare the tax until then.

For purposes of implementation from 2025 onwards, MEF will issue tax regulations to reduce the criteria for tax exemptions as follows:

1. Land that is subject to tax on unused land refers to the land outside the area that is subject to tax on immovable properties.
2. Land that is subject to tax on unused land shall be reduced by five hectares per site for purposes of calculating the payable tax.
3. Land with size of more than five hectares shall be exempt from tax on unused land if it meets one of the conditions as follows:

• Agricultural land that is currently cultivated with the approval of the committee or sub-committee of land valuation for tax on unused land;
• Land that is currently used for the economic activities of a physical person or legal person that has been registered with the GDT;
• Land, with or without construction, under a lease agreement;
• Land that is in the possession of the Royal Government or government institutions;
• Land under economic concession which is leased from the state, or community land;
• State-owned land which is leased to any physical person or legal person for other economic activity as per contract or as per agreement between the two parties;
• Land in a Special Economic Zone that directly serves agricultural, industrial, and/or service activities;
• Land that has been registered as an asset of an enterprise in the field of education and vocational training serving the educational and vocational training purpose of the enterprise. In case that this land has been sold or does not serve the above purpose, tax obligations shall be fulfilled as per the prevailing laws in force.

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