The Ministry of Economy and Finance has issued Prakas No. 648 on Tax Obligations for Business Activities in Airway Transport of Passengers and Cargo dated 12 August 2025 (the "Prakas").

Scope

Residents and non-resident taxpayers who carry people and/or goods by air within, from, or to the Kingdom of Cambodia are subject to the Prakas. This includes:

• Domestic transportation includes flights within Cambodia.
• International transport includes overflights between foreign countries as well as aircraft that originate in or are headed to Cambodia.
• Businesses that were founded, are run, or have their main office in Cambodia are considered resident enterprises. If a foreign-managed non-resident business operates through a permanent establishment ("PE") in Cambodia, such as a fixed place of business, branches, resident agents, or networks that support economic activity, they are subject to the Prakas. For tax registration and compliance, non-residents are required to designate a PE representative.

With the exception of civil aviation fees, airport security fees, and passenger service fees, gross income under the Prakas comprises revenues from both core transportation activities (such as passenger tickets, cargo fees, excess baggage, seat upgrades, commissions, in-flight sales, modification/no-show fees, etc.) and non-transport activities (such as interest, rentals).

Income Tax Requirements

• Resident Enterprises: Under general tax laws, resident businesses are subject to a flat 20% TOI on worldwide taxable profits (both domestically and internationally), which are determined by deducting permitted deductions from gross income. According to accrual principles, income is recognized when a supply invoice is issued or at fair market value for gifts, self-use, or below-market transactions.
• Not-resident enterprises:Non-residents are only liable to 20% TOI on income originating in Cambodia, and taxable profits are calculated as 15% of gross receipts from relevant activities that originate in Cambodia. This essentially results in a 3% TOI on gross income. This covers domestic travel, foreign travel from Cambodia, and other activities originating in Cambodia. Core transport revenue is recorded at the time of transport, whereas non-transport revenue is subject to general regulations.

Under this arrangement, non-residents who pay TOI are not required to pay the minimum tax or the TOI upfront.

Withholding Tax Obligations
Taxes must be withheld and sent by resident enterprises in compliance with standard regulations, such as 10% on rentals and 15% on payments for services to non-self-assessed inhabitants.
Non-resident businesses (via PE) are exempt from the majority of withholding requirements on income originating in Cambodia, with the exception of withholding on salaries paid to residents and rent on movable and immovable property.

Value-Added Tax
The following is how VAT is applied:

• Domestic Transport and Related Supplies: VAT, civil aviation/security/passenger fees, and ticket/cargo fees make up the tax base for domestic transportation and related supplies, which are subject to a 10% tax on the invoiced amount. All components must be listed separately on invoices.
• International Transportation and Associated Services: Navigation, landing, parking, information services, and fuel, food, or retail supplies (considered for use outside of Cambodia) are all zero-rated (0% VAT).

General VAT regulations provide for input tax credits. Standard VAT requirements must be followed while supplying non-transport income in Cambodia.

Special Tax on Passenger Transport

Passenger flights (not including cargo-only services) are subject to a monthly special tax at set rates per passenger and per flight:

• Domestic Flights:
  • Economy Class: KHR 10,000.
  • Business/First Class: KHR 16,000.
• International Flights Departing Cambodia:
  • Economy Class: KHR 40,000.
  • Business Class: KHR 60,000.
  • First Class: KHR 80,000.

The tax accrues in the month the service is performed. This represents a big shift from the previous special tax regime, as the tax is based on a percentage of the ticket price.

Reporting and Compliance Requirements
Resident Enterprises: All applicable taxes must be remitted in the appropriate forms and at the appropriate locations by the 20th of the subsequent month for monthly tax returns and annual returns.
By the 20th of the subsequent month, non-resident enterprises (via PE) must file their monthly returns for taxes, including TOI; they must also submit their yearly filings without paying extra taxes. On behalf of the non-resident, the PE is in charge of withholding and remitting taxes; non-compliance entails joint obligation.