Tax incentives are an important strategy in the development of the securities sector in Cambodia. The Budget Law for 2010 Management is the legal basis for tax incentives in the securities market.

The government has so far issued three sub-decrees on tax incentives for the securities sector, the last one being Sub-decree No. 01 ANKr.BK (Anukret) on January 4, 2019, with an implementation period of three years (2019-21), as well as other regulations. According to the Anukret and regulations, tax incentives include:

1. Tax incentive for equity and/or debt securities issuing company

A company granted approval from the Securities and Exchange Regulator of Cambodia (SERC) for the issuance of equity and/or debt securities and listed on the permitted securities market within three years (2019-21) is entitled to tax incentives on income tax for three years starting from:

• The beginning of the taxable year of securities issuance within the first six (6) months of the taxable year.

• The beginning of the taxable year after the taxable year by which securities are issued within the last six (6) months of the taxable year.

• Any period approved by the Minister of Economy and Finance.

Moreover, the tax incentive for income tax will be provided to the equity and/or debt securities issuing company under the following conditions:

• Fifty per cent reduction on income tax in case the company issues equity securities over 20 per cent of the voting right share and/or the company issues corporate bonds more than 20 per cent of total assets with a maturity of at least seven years.

• Proportion basis by taking 20.001 per cent as a base for a reduction on income tax in case the company issues equity securities 20 per cent or less of the voting right share and/or the company issues corporate bonds 20 per cent or less of total assets.

• The proportion yearly for a tax incentive is limited to not more than 20 billion riel for equity securities issuance and not more than eight billion riel for corporate bond issuance.

In addition to the tax incentive on income tax, an equity and/or debt securities issuing company is granted the tax liability waiver of full income tax, withholding tax, value-added tax, specific tax on certain merchandise and services, accommodation tax, and public lighting tax, for a certain number of years before the initial public offering and listing year (N):

• For qualifying entities that offer stock and debt securities on the main board of the Cambodia Securities Exchange (CSX), the historical tax liability waiver can extend from N-3 to N-10.

• For qualifying entities that offer stock and debt securities on the growth board of the CSX, the historical tax liability waiver can extend from N-2 to N-10.

2. Tax incentives for public investors

Public investors shall gain a 50 per cent deduction of withholding tax on interest and/or dividends which derive from holding and/or buying-selling government securities, equity securities and debt securities for three (3) years after the Anukret coming into force.

Furthermore, the investor has entitled exemption for registration tax collection for share buying in the primary market and share trading in the secondary market.