The General Department of Taxation ("GDT") released Instruction No. 14256 on May 12, 2025, to offer comprehensive guidelines for the documentation and interest rate structure for loans between related individuals. By outlining the specifications for supporting documentation and defining precise guidelines for determining interest rates, this instruction makes it easier to apply the arm's length concept outlined in Prakas No. 574.

Without the need for benchmarking studies, the Instruction permits businesses to agree on interest rates for related-party loans as long as sufficient supporting documentation is kept up to date. It also specifically caps interest rates that are in line with market rates, making compliance simpler and lowering administrative workloads.

The interest rate cap specified in the instruction is based on official market interest rates issued annually by the GDT. For example, the market interest rates for related-party loans in 2024 were set at the following levels by Notification No. 5524, which was published on February 19, 2025:

• 6.7% per annum for Khmer Riels loans
• 7.9% per annum for US dollar loans

These rates represent the highest permitted interest rates for related-party loans under the existing regulatory framework and are determined by averaging the annual lending rates of 12 major domestic commercial banks. These publicized rates are available to taxpayers through the GDT's website and official publications.