Stamp Duty Tax on Transfer of Property Ownership in Cambodia
Definition of Stamp Duty Tax on Transfer of Property Ownership
Stamp duty tax on transfer of property ownership refers to the transfer of right of possession of immovable property such as buildings, houses and/or land, located at geographical areas of capitals and provinces of Cambodia from one person to another person. Those obtaining the right of possession of immovable properties after the transfer of property ownership are responsible for paying this tax.
Tax Base of Transfer of Property Ownership
The Ministry of Economy and Finance (MEF) issued the new Prakas on the tax base to calculate the stamp duty tax on the transfer of ownership or right of possession of immovable property on March 22, 2019 and it becomes effective in July 01, 2019. Under this new Prakas, the stamp duty tax is determined with the rate of 4% of the value of the immovable property which is the objective of the transfer of ownership or right of possession.
The value of the immovable property is determined in the appendix of this new Prakas (available at GDT website) and in case its value is equal or higher than the value stated in the appendix, other relevant legal documents are required. This tax is collected for the sake of sub-national government.
The value of property includes both land and construction based on each property types. The value of construction is calculated based on the time it has been built and each floor while the value of land is evaluated based on the area and road types: boulevard, main road or sub-main road and so on.
For example, Mr. A has a two-floor apartment (E0 and E1) located in New World Borey (Chamkar Doung), Dangkor District, Phnom Penh City. The apartment was built in 2015 (construction period under 10 years by 2020) with the land area of 100 sqm and floor area of 64 sqm. Mr. A wants to sell that apartment to Mr. B and so how much is the stamp duty tax based on the appendix 1 of the new Prakas?
Hence, value of land = 100sqm x $250/sqm = $25,000; Value of E0 = 64sqm x $250/sqm = $16,000; Value of E1 = 64sqm x $200/sqm = $12,800. The value of Mr. A’s flat = $53,800 and the stamp duty tax to be paid = $53,800 x 4% = $2,152 or 8,608,000 Riels.
Tax Exemption on Transfer of Property Ownership
However, the stamp duty tax on transfer of property ownership is exempted among relatives: from grandfather or mother to grandchildren (zero tax), from parents to son or daughter (zero tax), from sibling to sibling and from parents to son or daughter-in-law.
Example 1: Mr. A wants to give the flat for free to Mr. B who is his sibling. In this case, Mr. B gets the tax exemption of 4,000,000 Riels. Therefore, the tax Mr. B has to pay = 8,608,000 – 4,000,000 = 4,608,000 Riels.
Example 2: Mr. A is dead, but leaves a letter of inheritance to Mr. B who is his son-in-law. In this case, Mr. B gets the tax exemption of 8,000,000 Riels. Therefore, the tax Mr. B has to pay = 8,608,000 – 8,000,000 = 608,000 Riels.
It is worth noting that this tax must be declared within the period of 3 months after the completion of the transfer of property ownership document. Taxpayers can either declare this tax at any tax department where the property is located or declare it at the partner banks of the ministry of economy and finance.
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