Cambodia QIP incentives and how to register

Short answer

A Qualified Investment Project (QIP) is a project registered with the Council for the Development of Cambodia (CDC) under the Law on Investment dated 15 October 2021. QIPs can choose between a tax-based incentive option, with an income tax exemption of three to nine years, and an expenditure-based option. The CDC states that it issues the registration certificate within 20 working days for projects outside the negative list.

What is a QIP?

The Law on Investment was promulgated on 15 October 2021 under Royal Decree NS/RKM/1021/14. It applies to Qualified Investment Projects, Expanded Qualified Investment Projects and Guaranteed Investment Projects registered with the CDC or a Municipal-Provincial Investment Sub-Committee. QIP status is confirmed by a registration certificate issued by the CDC, and only QIPs receive the basic incentives described below (KPMG).

Which activities can qualify?

Article 24 of the Law on Investment lists the sectors and activities eligible for incentives: high-tech industries involving innovation or research and development; innovative or highly competitive new industries or manufacturing with high added value; industries supplying regional and global production chains; industries supporting agriculture, tourism and production chains; electrical and electronic industries; spare parts, assembly and installation industries; mechanical and machinery industries; agriculture, agro-industry, agro-processing and food processing; small and medium-sized enterprises in priority sectors, industrial parks and science, technology and innovation parks; tourism; special economic zones; digital industries; education and vocational training; health; physical infrastructure; logistics; environmental management, protection, biodiversity conservation and the circular economy; green energy and climate adaptation technology; and other activities the Royal Government deems to have potential for socio-economic development.

Article 25 adds the test that decides who actually receives the incentives: a listed activity that is not on the Negative List in the implementing sub-decree receives basic tax and customs incentives, in whole or in part, once the registration certificate is issued.

The negative list and capital thresholds

Incentives are available only if the project falls outside the negative list and meets the minimum investment capital thresholds. These are set out in Annex 1 of Sub-Decree 139, adopted on 26 June 2023 (DFDL). The annex covers four sectors: agriculture, services, industry and infrastructure. Check the annex for the thresholds that apply to your activity.

BDO lists incentive-eligible sectors including high-tech and research and development, electrical and electronics, agriculture and agro-processing, tourism, special economic zones, digital industries, education, health, physical infrastructure, logistics, green energy and environmental protection.

The two incentive options

Option	What it includes
Option 1: tax-based	Income tax exemption for three to nine years depending on sector and activity, from the time the project earns its first income. After the exemption ends, income tax is paid at a progressive rate: 25% of the tax due for the first two years, 50% for the next two, and 75% for the last two. Also prepayment tax, minimum tax and export tax exemptions.
Option 2: expenditure-based	Special depreciation of capital expenditure, and a deduction of up to 200% of specified expenses for up to nine years, plus time-limited prepayment tax, minimum tax and export tax exemptions.

Article 27 adds further incentives for all QIPs: exemption from value-added tax on the purchase of locally made production inputs; a 150% deduction from the tax base for research, development and innovation, vocational training, worker accommodation and canteens, machinery upgrades and worker welfare; and income tax exemption for the expansion of a QIP, as set out in the sub-decree. Export QIPs and supporting-industry QIPs are also entitled to customs duty, special tax and VAT exemptions on imports of construction material, construction equipment, production equipment and production inputs.

How registration works

The 2021 law replaced the former two-step process with a single registration that produces a registration certificate (DFDL).
Applicants can file in hard copy or online, and the certificate carries a machine-readable code with initial project data.
The CDC states a 20 working day timeline for issuing the certificate to projects that are not on the negative list.
The date the certificate is issued is the project implementation start date.
The certificate does not replace other operating licences.

After registration

Investors must submit semester and annual reports to the CDC within 20 days after the tax return filing deadline or risk losing incentives, after which the CDC issues a Certificate of Compliance (DFDL).

On change of ownership, Article 29 of the Law provides that the rights and entitlements of a QIP may not be transferred to a third party except through an acquisition, sale or merger of the investment project. Article 30 allows such a transfer to keep incentives, guarantees and obligations if it is done in accordance with applicable law and through a written request to the CDC or the relevant Municipal Provincial Investment Sub-Committee.

Should you register? The trade-off

Registration buys an income tax holiday and import duty relief. It costs an external audit, reporting to the CDC and a compliance discipline, and it locks your activity to what is on the negative list. Whether that is a good trade depends on your margins and your horizon, so it is worth stating the cost side plainly.

You get	You take on
An income tax holiday of three to nine years, or expenditure-based relief	Semester and annual reporting to the CDC, and a Certificate of Compliance each year
Import duty and VAT exemptions on specified inputs and equipment	An external audit, which the incentive conditions depend on
Access to the 20 working day registration route and the CDC's investor services	Your activity and your capital must satisfy the negative list test in the implementing sub-decree
A registration certificate that supports the 20 working day timetable	The certificate does not replace your operating licences, so the licence timeline still runs

Two further points decide the arithmetic. The exemption runs from the year the project first earns income, not from registration, so a project that takes two years to start gives up two years of benefit. And the incentives are conditional on a compliant audit, so the saving and the cost arrive together.

Protections for investors

KPMG summarises guarantees under the law, including non-discriminatory treatment, free purchase of foreign currency and repatriation through authorised banks, intellectual property protection, and protection against nationalisation or expropriation except for public interest with fair compensation under legal procedures.

Where Invest Cambodia fits

Through investment advisory we assess whether the incentives fit your project, and through company establishment coordination we coordinate the application with licensed professionals. The CDC decides every application, and we cannot guarantee eligibility.

Questions investors ask

How long does QIP registration take?

The CDC states 20 working days to issue the registration certificate to eligible projects, and the certificate can be issued in digital form. That is the registration itself; your operating licences run on their own clock, and DFDL notes the certificate does not replace them.

Do I need a QIP to operate in Cambodia?

No. A QIP is registered with the CDC to access incentives. A company can be incorporated and trade without one, which is why plenty of businesses never register.

What is the difference between the two incentive options?

Option one is an income tax exemption of three to nine years depending on sector and activity, counted from the year the project first earns income, followed by a six-year phase-in at 25%, 50% and 75% of the tax due. Option two is expenditure-based: special depreciation and a deduction of up to 200% of specified expenses for up to nine years. Both also exempt pre-payment tax, minimum tax and export tax.

What is the Negative List and why does it matter?

It is the eligibility test. Article 25 of the Law on Investment says a listed activity receives basic incentives only if it is not on the Negative List in the implementing sub-decree, and that sub-decree also sets minimum investment capital by sector. If your activity is on the list, registration will not deliver the tax holiday you modelled.

What do I give up by registering?

Semester and annual reporting to the CDC, a Certificate of Compliance each year, and an external audit, because the incentive conditions depend on a compliant audit. The exemption also runs from the year the project first earns income, so a slow start gives away benefit.

Can a QIP be sold or merged?

Article 29 provides that rights and entitlements may not be transferred to a third party except through an acquisition, sale or merger of the investment project. Article 30 allows such a transfer to keep the incentives, guarantees and obligations if it follows applicable law and is made through a written request to the CDC or the relevant investment sub-committee.

Is registering worth it for a smaller project?

Usually not, and the calculation is worth doing before you commit. The benefit depends on your taxable profit, the exemption period and the audit cost you take on. Our guide on <a href="/guides/costs-of-entry/">entry costs</a> shows how to build that comparison.

Official tools to use alongside this guide

CDC step-by-step guide and QIP registration

Sources

General information only, not legal, tax or investment advice. Laws, rules and figures change. Confirm the current position with licensed Cambodian professionals before acting.

Qualified Investment Projects (QIP): incentives and how to register