Key Provisions To benefit from this exemption, payments must be supported by a valid tax invoice. While the payer is no longer required to withhold tax on these transactions, the recipient of the income remains responsible for declaring and paying the applicable income tax.

Regulatory Evolution This policy marks the conclusion of a lengthy regulatory transition:

• Historically: The 1997 Law on Taxation and Prakas No. 1059 mandated WHT on services, rents, royalties, and interest to secure government revenue, regardless of the recipient's registration status.
• Partial Shift: Prakas No. 098 (2020) and Prakas No. 578 (2024) began exempting WHT on services and rents for self-assessment taxpayers but maintained the requirement for royalties and interest, leading to cash-flow difficulties for certain businesses.
• Current Reform: Circular No. 024 completes this shift by explicitly extending the exemption to royalties and interest, a first for Cambodian tax policy.

Rationale for Change This reform highlights Cambodia’s move toward a more modern and investment-friendly tax environment. WHT was originally implemented as a safeguard against low compliance and limited data. However, the General Department of Taxation (“GDT”) has since enhanced its digital systems and administrative capabilities, resulting in improved voluntary compliance. With the original justification for broad WHT application no longer applicable, the government has adopted this fairer approach to support business liquidity while preserving the integrity of the tax system.