On December 26, 2025, the Ministry of Economy and Finance promulgated Prakas No. 1123, establishing a income tax exemption for Qualified Investment Projects (“QIPs”) in the textile and garment sector that have reached the end of their tax exemption period.

Key Highlights

• Tax Suspension: Eligible enterprises are granted a reprieve from monthly income tax payments until 2028.
• Compliance Condition: This benefit is strictly conditional upon full adherence to tax regulations; non-compliance may result in the withdrawal of the incentive and the application of penalties.

Context and Significance

This regulation ensures the continuity of fiscal support following the expiration of Prakas No. 002 (2023) at the end of 2025. While the previous regime was limited to specific export-oriented items such as clothing, footwear, and bags, the new Prakas expands the scope to reflect the government's evolving manufacturing policies. The garment sector remains one of the few industries to receive such preferential treatment after its QIP status expires, highlighting its strategic importance to Cambodia’s economy due to its significant role in exports and job creation.