For investors seeking investment incentives, such as a tax holiday and lower corporate profit taxes, it is first necessary to apply to the Cambodian Investment Board for an investment license and award of the various available incentives. In the interest of space, the steps necessary in order to make this application are not included here.
Ministry of Commerce
Any person or group of persons "doing business" must register with the Ministry of Commerce. While there is no particular definition of "doing business", it will usually be obvious when this applies. Registration at the Ministry of Commerce requires filing the company statutes. These are known by various names in various countries and some readers may be more familiar with the term Memorandum and Articles of Association or Certificate of Incorporation and company by-laws. They all serve the same purpose; that is, they state who owns the company, who are the directors, who are the shareholders and how many shares, of what value, each shareholder owns.
In addition, the rules by which the company is to be governed are specified. The Ministry of Commerce has a standard statute it uses for companies unless the persons establishing a company want to develop their own. Because the Ministry's standard statutes are based on out of date laws which have never been updated, most companies will want to develop their own statutes. These can also be better adapted to fit the needs of each company.
There is currently no companies law in Cambodia specifying what information must be included in the company statutes. Therefore, it is safest to submit statutes of a generally accepted international standard in order to avoid the possibility of later needing to amend them to meet the requirements of a company’s law.
The statutes of the company must be approved by the Ministry of Commerce. The application for approval must be submitted with various supporting documentation, including a registered lease for the office premises, passport photocopies and photographs of directors, and a letter from a local bank confirming that the registered capital of the company has been remitted to Cambodia.
After the Ministry of Commerce reviews the documents and approves the application, it will issue a License for the company and a Certificate of Registration. Sometimes it is also necessary to register with the Ministry of Commerce's Phnom Penh Municipality Office in order to register the company as doing business within the Municipality. Once the company is registered, additional ministries must be contacted and various formalities completed.
Ministry of Economy and Finance
The Certificate of Registration must be taken to the Central Branch of the Tax Department in order to have an imprint stamp placed on it. This stamp demonstrates that the company has paid the required tax on having received an official government document. Once stamped, the company can apply to the Ministry of Economy and Finance's Taxation Department for a taxpayer identification number. This number must be included in all future tax filings and must be applied for within fourteen (14) days of the company having registered or beginning its business.
At the time of applying for this number, the company must also pay the first annual patent tax which is based upon the size of the company, usually initially determined by the registered capital of the company.
Normally, the Taxation Department will issue the taxpayer identification number within one to two weeks and registration at this Ministry is complete.
Ministry of Social Action, Labor and Veterans
More commonly referred to as the Ministry of Labor, this Ministry requires new businesses to file various documents regarding their employees at the time of opening the business. These include information on all employees hired by the company. In addition, a new regulation requires submission of a company's proposed construction plans to this Ministry in order to obtain its approval.
Approval by a Labor Inspector of the company's payroll register and business ledger is also required. It is useful for new businesses to develop a working relationship with the Labor Inspector responsible for their establishment as this individual is entitled to make periodic inspections and can be an integral part of any future labor decisions by an employer.