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Clarification on Tax Treatment for Board Members and Company Directors in Cambodia
On June 20, 2025, Cambodia’s Ministry of Economy and Finance issued Instruction No. 19116 to clarify the tax treatment of payments made to board members and company directors.
Under this guidance, board members and directors who act as employees, including those seconded by a foreign head office to manage a Cambodian entity, are required to pay payroll tax on all salary received, regardless of where the payment is made or whether they hold a work permit.
Individuals who are not considered employees, such as those providing independent services or nonresident directors performing duties for a Cambodian company, are instead subject to withholding tax.
However, directors are exempt from payroll tax if they do not perform regular management duties in Cambodia, attend only occasional meetings, and do not receive a salary from a Cambodian company.
This clarification underscores the importance of accurately classifying board members and directors to ensure compliance with Cambodia’s tax obligations.
