How can an Umbrella Company Help with Contracting in Cambodia?
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Cambodia. Even better, most are experts in Cambodian and expat tax law, meaning they’ll also help you optimise your earnings in Cambodia.
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Can I Organise My Taxes and Work Permit Myself?
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Cambodia.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in Cambodia, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Cambodia and your home country can seem like full-time work in itself.
A Contractor’s Guide to Taxes in Cambodia
One of the most consistently challenging aspects of contracting in Cambodia is complying with the country’s tax system. As well as paying tax in Cambodia, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
How do I calculate my taxable income in Cambodia
If you’re working in Cambodia under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Cambodia for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Cambodia, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in Cambodia through PAYE is left with the prospect doing everything themselves.
Do you know much about Cambodian Tax Law? Does Cambodia have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Cambodia can range from 0 to 20 percent, and you need to be sure you are placed in the correct tax brackets.
Tax Filing as a Contractor in Cambodia
|When Do You Need to Lodge Your Tax Return?||15th of the following month|
|Tax Filing Deadline||15th of the following month|
|Can you file it online?||Yes, https://www.tax.gov.kh/|
How to File Taxes in Cambodia as a Contractor
Employment income tax in Cambodia is withheld and paid by the employer on a monthly basis. Individuals receiving employment income only are not required to submit annual personal income tax returns to the General Department of Taxation as the monthly tax withheld is considered final.
Step 1: Register
Register here(link is external) on the General Department of Taxation website for e-Services including the online filing and payment of taxes.
Step 2: File Taxes
Once you have registered, you can file taxes here.
The website for the Taxation Department’s e-Services may be difficult to access. Downloading the relevant forms is a more reliable alternative. These can be found here(link is external). It is recommended that you consult a tax specialist and/or translator.
Tax Figures in Cambodia
|Currency||Cambodian Riel (KHR)|
|Tax-free Threshold in Cambodia||KHR800,000|
|Income Tax Rates|
The above tax rates refer to monthly employment income.
Non-residents: Non-residents are taxed at a flat rate of 20%.
Tax Reliefs: Resident individuals may be given a tax relief of KHR75,000 per child under 14 years old or up to 25 years old if still at school, and per unemployed dependent spouse.
Tax Residency in Cambodia
When do you become a tax resident in Cambodia
You become a tax resident in Cambodia when:
- You are domiciled in Cambodia;
- You have a principal place of abode in Cambodia; or
You are present in Cambodia for 183 days or more during the income tax year.
Does the 183 day rule apply in Cambodia
Am I taxed on my global income in Cambodia
Residents are taxed on their worldwide income. Non-residents are taxed on their Cambodia-sourced income only.
Can you set up your own Limited Company in Cambodia?
|How long does it take to set up||99 days|
|How much does it cost||KHR2,461,236|
|Is it easy?||Starting a Business Rank: 183/190 (Source: World Bank)|
Tax Calculator in Cambodia
If you are a contractor and want a calculation on your tax and net retention in Cambodia, we can supply it to you free of charge.
Using an Umbrella Company for Income Tax in Cambodia
Contractors in Cambodia are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Cambodian umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Cambodian taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Cambodian tax office or tax department directly including processing your tax refund if you are eligible.
How We Can Help You with Tax in Cambodia
We work with numerous umbrella companies in Cambodia, many of whom are experts in tax and immigration laws. If you have any questions about tax in Cambodia, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Cambodian work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Cambodia but without the overhead of directly dealing with the Cambodian tax authorities. Get in touch with us today for some reliable advice on tax in Cambodia!
A Contractor’s Guide to Work Permits in Cambodia
Immigration is one of the primary concerns for any contractor hoping to start working in Cambodia. Permanent employees will find it easy to get their Cambodian work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer.
The Cambodian work permit, known more commonly as the E Visa, is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in Cambodia is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.
How Does an Umbrella Company Work?
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Cambodia (which means avoiding fees, fines, or even worse penalties).
How Can We Help You?
There’s a huge variety of Umbrella Companies with different specialities and advantages in Cambodia. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout Cambodia and match contractors with the right company for them. If you’ve already secured a contract in Cambodia, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).