Insight into Tax on Unused Land in Cambodia
What is unused land? Unused land in Cambodia refers to any type of land that is not used for commercial, residential, industrial and agricultural purposes.
Effective in 1996, tax on unused land aims to prevent speculative activity in which investors buy land and wait to resell it for a profit, encourage the effective use of land for development purposes and increase economic activity and labor force. Tax on unused land is used for the sake of sub-national government.
Below are 5 types of land which are considered used land such as 1. land with construction in the residential area 2. land for rent with construction that is occupied 3. land with economic activity 4. state land leased to legal person or entity 5. land under investment agreement.
1. Land with Construction in Residential Area
This refers to the permanent place in which dwellers have lived for 183 days or more starting from October 1st of previous year until September 30th of taxation year. It is the main residence where dwellers live and eat regularly after work.
2. Land for Rent with Construction (Occupied)
This land is situated in the residential, commercial or industrial area with other constructions such as housing, buildings and warehouses and so on which were leased to tenants for steady fee on a monthly, yearly and long-term basis.
3. Land with Economic Activity
This land is used for economic activities in the agriculture, industry, business and tourism sector in accordance with the state’s land division. It is considered used land only if this land can generate enough revenue from those economic activities.
4. State Land Leased to Legal Person or Entity
It is the public land belonging to the state whether it is in the taxation list or not. This land has any particular points among the above three land types.
5. Land under Investment Contract
This includes land under investment contract or land concession which is permitted by Cambodian Development Council (CDC) for investment in particular sector or concession land for short, medium and long-term purposes which is permitted by the Royal Government of Cambodia to implement any project.
For those types of land contrary to the 5 categories are considered unused land and landlords must pay tax on unused land at a rate of 2 percent tax base. Tax base is land value on the market calculated based on each particular area which is evaluated by Unused Land Appraisal Committee (ULAC).
Tax on unused land (As from 2007) = (Total Land Area x Tax Base x Tax Rate). For example, Mr. A has an unused land of 9,000 square meters and tax base evaluated by ULAC is 15,000 Riels per sqm. Therefore, tax to be paid for the year 2020 = 9,000sqm x 15,000 x 2% = 2,700,000 Riels.
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