Tax on Seniority Payment From 2020
As required under Circular No. 002 dated March 24th, 2020 of Ministry of Economy and Finance (“MEF”), from 2020, the seniority payment which is higher than 4,000,000 Riels (or approximately UD$ 1,000) per year shall be taxable. Under previous MEF’s Circular (Circular No. 003 dated 11 April 2019), tax on seniority payment for Cambodian workers for the period before and during 2019 was fully exempted. According to the new Circular, the seniority payment which is less than 4,000,000 Riels per year is exempted from taxation. However, any amount exceeding 4,000,000 Riel shall be included to the basis for calculating tax on salary. In the event that the payment of seniority payment is paid twice a year, the calculation of tax on salary shall be as following:
- At the first payment of seniority payment: the amount of 2,000,000 Riels shall be deducted from the seniority payment, and the remaining amount shall be included to the taxable monthly salary.
- At the second payment of seniority payment: the calculation shall be the same as above by taking the remaining seniority for the second period minus 2,000,000 Riels. the result shall be then included to the taxable monthly salary.
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