Foreign Tax Credit for Tax on Salary

Foreign Tax Credit for Tax on Salary (ToS)

A physical person resident in the Kingdom of Cambodia is liable to the tax on salary for Cambodian source salary and foreign source salary.

Resident taxpayers can claim back tax credit for Tax on Salary (ToS) that they had paid in any foreign country, any year in order to offset against salary tax that they have to pay in the Kingdom of Cambodia in that year. However, the tax credit provided for ToS paid in any foreign country is the smallest amount of:

• – The tax amount actually paid in that foreign country
• – The amount obtained by multiplying the tax on total salary from all sources for the same period calculated base on progressive tax rates (0% to 20%) of Cambodia Tax with the ratio of salary receive in that foreign
  country to the total salaries from all sources.

Example 1,

Mr.A is resident employee at XYZ Company. XYZ has subsidiary at Country A, and XYZ sent Mr.A to work there for 2 months.

Assume that Mr.A got salaries from two sources : Cambodia source and foreign country source ( country A). Salary at country A will be subject to tax on salary based on foreign law of country A, but tax on salary paid to foreign country can claim back from Cambodia tax authority with reliable good evidence of payment to foreign country ( country A).