Starting a Business in Cambodia: Step-by-Step Guide to Success in 2025

Cambodia is rapidly positioning itself as a fertile ground for entrepreneurs and investors. With sustained GDP growth, increasing foreign direct investment (FDI), and strategic positioning within the ASEAN Economic Community (AEC), the Kingdom has become a hotspot for startups, small and medium enterprises (SMEs), and multinational expansions.

This expert guide breaks down the entire process of starting a business in Cambodia, addressing regulatory requirements, business structures, compliance tips, and emerging opportunities.

Step 1: Starting a Business in Cambodia: Step-by-Step Guide

Business registration is a legal requirement and a fundamental first step. The Ministry of Commerce (MoC) oversees this process.

Key Steps:

• Choose a business structure: Sole proprietorship, partnership, limited liability company (LLC), or branch office.
• Reserve your business name: Ensure uniqueness and compliance with naming regulations.
• Submit required documents: Includes passport/ID copies, lease agreement, Articles of Incorporation, and business objectives.
• Obtain the Certificate of Business Registration: This legalizes your entity (MoC source).

Important Tip:

Using Cambodia’s Online Business Registration Portal (“Single Portal”) significantly streamlines the process.

Step 2: Licenses and Permits

After business registration, the next step involves acquiring relevant licenses and tax registrations.

Requirements:

• Sector-specific licenses: Required for regulated industries like construction, food and beverage, or tourism.
• Tax Identification Number (TIN): Register with the General Department of Taxation.
• Value Added Tax (VAT): Required if annual revenue exceeds the threshold (KHR 250 million).
• Operating Licenses: Renewed annually with supporting documents and proof of compliance.

Step 3: Foreign Investment and Ownership Regulations

Foreign entrepreneurs must understand Cambodia’s investment framework and ownership restrictions.

CDC and Investment Incentives:

• Register large-scale investments with the Council for the Development of Cambodia (CDC) (CDC source).
• Apply for an Investment Registration Certificate (IRC).
• Eligible businesses enjoy tax holidays, import duty exemptions, and profit repatriation privileges.

Foreign Ownership:

• 100% foreign ownership is allowed in most sectors, but land ownership is restricted to Cambodian citizens.
• Workarounds include long-term leases or setting up joint ventures.

Step 4: Employment and Labor Compliance

Once operational, businesses must comply with labor laws under the Ministry of Labour and Vocational Training (MLVT).

Compliance Checklist:

• Employment contracts: Required in writing (Khmer or bilingual).
• Work permits for foreigners: Employers must apply on behalf of foreign staff via FWCMS.
• National Social Security Fund (NSSF): Mandatory registration for all employees.
• Minimum wage & working hours: Adhere to updated labor regulations (MLVT source).

Step 5: Taxation and Financial Management

Tax obligations begin immediately after TIN registration.

Key Aspects:

• Corporate Income Tax: Standard rate is 20% (ASEAN Briefing).
• Monthly and annual tax filings: Cover VAT, salary tax, and withholding tax.
• Proper bookkeeping: Use registered accounting software and ensure annual audits for medium and large enterprises.
• Open a corporate bank account: Required to process payments, payroll, and imports/exports.

Challenges Entrepreneurs Face in Cambodia

Despite its promise, Cambodia presents hurdles for new businesses:

• Bureaucracy: Regulatory processes can be complex and time-consuming.
• Infrastructure gaps: Especially in rural areas.
• Limited access to financing: Banks often require high collateral.
• Competitive markets: Saturated sectors like hospitality and retail.
• Corruption risks: Transparency remains a concern in certain sectors (Transparency International).

Opportunities for Business Growth in Cambodia

Favorable Conditions:

• Strategic location: Access to ASEAN markets and trade corridors.
• Emerging middle class: Boosting domestic consumption.
• Growing sectors:
  • Tourism and hospitality recovery
  • Agribusiness modernization
  • Light manufacturing and textiles
  • Digital and tech startups

Government Support:

• SME financing programs
• CDC investment incentives
• Startup incubation hubs in Phnom Penh and Siem Reap

Additional Considerations for Starting a Business

• Environmental compliance: Required for industrial and agricultural sectors.
• Cultural understanding: Building trust is key in business negotiations.
• SME support programs: Offered by NGOs and development agencies like JICA and USAID.
• Import/export licensing: Must be registered with customs and the MoC.

Summary Table: Key Steps and Requirements for Starting a Business in Cambodia

Step	Requirements/Actions	Responsible Authority
Business Registration	Register with MoC, choose business structure	Ministry of Commerce
Licenses & Permits	Sector-specific licenses, TIN, VAT registration	General Department of Taxation
Foreign Investment	CDC registration, obtain IRC, comply with ownership rules	Council for the Development of Cambodia
Employment & Labor	Work permits, NSSF registration, labor law compliance	Ministry of Labour and Vocational Training
Taxation & Finance	Corporate tax filing, open bank account, auditing	General Department of Taxation

Conclusion

Starting a business in Cambodia in 2025 offers vast opportunities for those who approach it with diligence and legal awareness. From choosing the right entity structure to ensuring full compliance with tax and labor laws, every step is crucial. Entrepreneurs who leverage Cambodia’s government incentives, form local partnerships, and understand cultural and market dynamics are more likely to succeed.

For more guidance, consult local legal advisors or professional business consultants to navigate regulatory nuances and stay ahead in this dynamic economy.