Cambodia touts 150% tax deduction for R&D, skills and factory upgrades

PHNOM PENH, July 26, 2026 (KPT) — Cambodia has unveiled enhanced investment incentives allowing qualified projects to deduct 150% of eligible expenses from their taxable income, in a bid to spur research, workforce development and factory modernization, officials said Friday.

Lim Visal, Deputy Secretary‑General of the Cambodian Investment Board, highlighted the measure during a forum on tax obligations for Cut, Make, Trim (CMT) and Free on Board (FOB) enterprises at the General Department of Taxation.

He said the incentives, provided under the Law on Investment and related regulations, apply to Qualified Investment Projects (QIPs) engaged in priority activities. Eligible costs include research and innovation, human resource training, worker housing and childcare, transport, machinery upgrades and waste‑treatment facilities.

The scheme allows QIPs to deduct qualifying expenses at 150% of their actual value when calculating taxable income, offering support for firms investing in productivity, technology and improved working conditions.

Enterprises must meet requirements including registration with the Council for the Development of Cambodia or provincial investment sub‑committees, and maintain proper records to verify genuine economic activities.

Visal also outlined differences between CMT and FOB models. CMT factories provide manufacturing services with inputs supplied by buyers, while FOB producers handle raw material purchases, manufacturing and shipment.

He further explained criteria for QIP status and import incentives, under which customs duties, specific tax and VAT on eligible imports may be borne by the state.

Officials said the clarifications aim to help businesses properly apply investment and tax rules while tapping incentives designed to boost Cambodia’s industrial capacity.