On December 31 2025, the Ministry of Economy and Finance (MEF) issued a revised Prakas on Capital Gains Tax (CGT), amending the July 2025 regulation to address critical issues regarding share transfers and cross-border taxation.

Key Provisions of the Revised Prakas:

• Deferral for Immovable Property: The implementation of CGT on gains from the transfer of real estate has been postponed to January 1, 2027.
• Correction of Share Transfer Rules: The previous regulation (Prakas No. 496) treated the entire share transfer value as capital gains. This created a risk of lost revenue for non-resident investors from Double Tax Agreement (DTA) countries, as treaty clauses often grant exclusive taxing rights to the investor's home country, preventing Cambodia from levying either CGT or dividend tax.
• New "Deemed Dividend" Policy: To rectify this, the revised regulation mandates that undistributed profits are treated as "deemed dividends" at the time of share transfer. This ensures Cambodia can levy Withholding Tax (WHT) on these profits regardless of the investor's residency.
• Treatment of Remaining Gains: The balance of the transfer value remains classified as capital gains. While non-residents from non-DTA countries are subject to the standard 20% CGT, those from DTA countries may still claim exemptions on this portion under relevant treaty provisions.
• Double Taxation Relief: A mechanism has been introduced to prevent the same income from being taxed twice—specifically for dividends taxed as "deemed" at the transfer stage and subsequently distributed. However, practical guidelines for this process are still pending.

Conclusion

This revision represents a strategic policy shift that strengthens Cambodia’s rights as a "source state" to tax profits while ensuring its framework remains compatible with international tax treaties.