Starting a business in Cambodia
Many people dream of being their own bosses. This can mean starting your own business
which, in Cambodia, is a fairly straightforward procedure, especially when compared
to some of the surrounding countries in the region. This article will discuss how
to set up your own company in Cambodia by focusing on the ministries with which it
is necessary to interact. Of course, variations are required for particular circumstances
but the rough outline can be established in this article.
This article does not cover investment projects for which an additional step is necessary
prior to approaching the Ministry of Commerce. For investors seeking investment incentives,
such as a tax holiday and lower corporate profit taxes, it is first necessary to
apply to the Cambodian Investment Board for an investment license and award of the
various available incentives. In the interest of space, the steps necessary in order
to make this application are not included here.
Ministry of Commerce
Any person or group of persons "doing business" must register with the
Ministry of Commerce. While there is no particular definition of "doing business",
it will usually be obvious when this applies. Registration at the Ministry of Commerce
requires filing the company statutes. These are known by various names in various
countries and some readers may be more familiar with the term Memorandum and Articles
of Association or Certificate of Incorporation and company by-laws. They all serve
the same purpose; that is, they state who owns the company, who are the directors,
who are the shareholders and how many shares, of what value, each shareholder owns.
In addition, the rules by which the company is to be governed are specified.
The Ministry of Commerce has a standard statute it uses for companies unless the
persons establishing a company want to develop their own. Because the Ministry's
standard statutes are based on out of date laws which have never been updated, most
companies will want to develop their own statutes. These can also be better adapted
to fit the needs of each company. There is currently no companies law in Cambodia
specifying what information must be included in the company statutes. Therefore,
it is safest to submit statutes of a generally accepted international standard in
order to avoid the possibility of later needing to amend them to meet the requirements
of a companies law.
The statutes of the company must be approved by the Ministry of Commerce. The application
for approval must be submitted with various supporting documentation, including a
registered lease for the office premises, passport photocopies and photographs of
directors, and a letter from a local bank confirming that the registered capital
of the company has been remitted to Cambodia.
After the Ministry of Commerce reviews the documents and approves the application,
it will issue a License for the company and a Certificate of Registration. Sometimes
it is also necessary to register with the Ministry of Commerce's Phnom Penh Municipality
Office in order to register the company as doing business within the Municipality.
Once the company is registered, additional ministries must be contacted and various
Ministry of Economy and Finance
The Certificate of Registration must be taken to the Central Branch of the Tax Department
in order to have an imprint stamp placed on it. This stamp demonstrates that the
company has paid the required tax on having received an official government document.
Once stamp-ed, the company can apply to the Ministry of Economy and Finance's Taxation
Department for a taxpayer identification number. This number must be included in
all future tax filings and must be applied for within fourteen (14) days of the company
having registered or beginning its business. At the time of applying for this number,
the company must also pay the first annual patent tax which is based upon the size
of the company, usually initially determined by the registered capital of the company.
Normally, the Taxation Department will issue the taxpayer identification number within
one to two weeks and registration at this Ministry is complete.
Ministry of Social Action, Labor and Veterans
More commonly referred to as the Ministry of Labor, this Ministry requires new businesses
to file various documents regarding their employees at the time of opening the business.
These include information on all employees hired by the company. In addition, a new
regulation requires submission of a company's proposed construction plans to this
Ministry in order to obtain its approval. Approval by a Labor Inspector of the company's
payroll register and business ledger is also required.
It is useful for new businesses to develop a working relationship with the Labor
Inspector responsible for their establishment as this individual is entitled to make
periodic inspections and can be an integral part of any future labor decisions by
Depending on the type of business in which the company is engaged, registration
or approval by other ministries may also be required. For businesses in the tourism
industry, the Ministry of Tourism must issue certain licenses. This is similarly
true for businesses in the agricultural industry (Ministry of Agriculture) or manufacturers
(Ministry of Industry). It is important to determine which additional ministries
may need to be contacted.
Source: The Phnom Penh Post