Legal and Tax Updates

Issue: No. 014P/23– 15 August 2023

On 02 March 2023, the Royal Government of Cambodia (the “RGC”) issued a Sub-Degree No.50 ANKr.BK on the Management of Real Estate Development Business, which compose of 9 chapters and 31 articles (the “Sub-Degree No.50”). Sub-Degree No.50 aims to determine the rules and procedures for the management and control of the real estate development business in Cambodia.

Despite the issuance of Sub-Degree No.50, Prakas No.089 dated 20 January 2020 on the Management of Real Estate Development Business (the “Prakas No.089”) persists applicable.

Comparison with Prakas No.089

In comparison to Prakas No.089, the following points have been significantly changed under Sub-Degree No.50:

• The shift in responsibility from the Ministry of Economy and Finance (the “MEF”) to the Real Estate Business and Pawnshop Regulator (the “RPR”) of the Non-Banking Financial Services Authority (the “NBFSA”) and Provincial/Municipal Department of Economy and Finance (the “PDEF”); and
• The authority to settle disputes has been shifted from the MEF to the RPR.

Type of Licenses and Permits

All real estate development businesses shall obtain a license or permit from the RPR before conducting any business activities.

According to the Sub-Decree No.50, there are 3 types of licenses or permits which as below:

• Category 1: License or permit for housing development business;
• Category 2: License or permit for co-owned building development business; and
• Category 3: License or permit for land lot development business.

In addition, the licenses or permits under Category 1 and Category 2 above-mentioned are divided into two sub-types of licenses and permits:

• Business License and Permit Type 1: to be granted to any developer who has completed construction, before sales and lease announcements; and
• Business License and Permit Type 2: to be granted to any developer who starts construction while also announcing progressive sales or leases.

Inspection

The RPR or PDEF is entitled to appoint any competent authority to investigate and prevent any real estate development business that operates without a business license or permit, as well as to inspect real estate development activities that are in operation with a license or permit. During the inspection period, the licensed or permitted real estate developer shall provide well cooperation with competent authorities and provide a report and any other relevant documents as required.

Report

The licensed or permitted real estate developer shall submit an audited annual report no later than 3 (three) months after each fiscal year or during any reasonable time as determined by the RPR and any other reports as required by a separate regulation. The detailed mechanism of such inspection shall be specified under a separate provision.

Please note that the detailed rules and procedures to obtain the above licenses or permits have been already mentioned under Prakas No.089.

Disclaimer

The article is merely for general information purposes. It does not constitute a legal advice on the subject matter. If you have any questions or need any assistance, please feel free to contact us:

	SON Sokeng, Partner, Managing Director sokeng.son@sithisak-lawoffice.com +855 12 885 870	He has more than 8 years of professional experiences in corporate, commercial, investment and capital market sector in Cambodia. He has leaded a legal counsel team to advise and assist ACLEDA Bank Plc. in the process of listing on the Cambodia Securities Exchange (CSX). He has been a team member of a legal counsel team to advise and assist in the IPO process of Phnom Penh Autonomous Port (PPAP). He is currently leading a legal counsel to advise and assist in an IPO of a SME for its proposed listing on the growth board of the CSX.
	Dr. CHHAK Limchheang, Senior Legal Advisor, Deputy Head of Real Estate and Construction Practice Group limchheang.chhak@sithisak-lawoffice.com +855 89 813 160	He has several years of professional experiences in real estate-related transaction and construction sector in Cambodia. He has advised local and foreign clients on acquisition and disposal of residential, industrial and commercial properties, on commercial lease, factory perpetual lease, real estate joint venture development and FIDIC agreements. Recently, he led counsel to advise on both real estate and tax issues of real estate development project with an approximate investment portfolio of USD 40 million in Kampot Province. He is currently leading a legal counsel to advise a major domestic company in their joint venture property development with an investment portfolio nearly USD 200 million in Phnom Penh.

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