The Royal Government of Cambodia signed a double tax agreement (DTA) with South Korea, as one of five agreements made on the sidelines of the ASEAN-Republic of Korea Commemorative Summit and the First Mekong-ROK Summit.
The DTA has similar provisions to those signed earlier between Cambodia and other countries, which include Singapore, Thailand, Brunei, China, Vietnam, Indonesia, Hong Kong and Malaysia. Those provisions include the ability for tax residents in Cambodia and South Korea to be provided with a corporate tax credit for income that was already subject to tax in the counterparty’s jurisdiction.
The treaty also provides for a reduction in the standard withholding tax rates for cross-border transactions, and an information exchange mechanism between the tax authorities of both countries to enhance tax enforcement against tax evasion, base erosion and profit shifting by taxpayers.
Bilateral trade between Cambodia and South Korea reached nearly US$1 billion in 2018, with South Korea ranked as Cambodia’s second-largest foreign investor behind China. The DTA will come into force after the completion of ratification procedures by both jurisdictions.