Cambodia cuts fuel VAT to 4% to ease cost pressures amid rising global oil prices

PHNOM PENH, Mar. 23, 2026 (KPT) — The Ministry of Economy and Finance (MEF) on Tuesday slashed the value added tax (VAT) on fuel products from 10 percent to 4 percent in a bid to cushion households and businesses from the impact of surging global oil prices.

The measure, which took effect on March 20, applies to gasoline and diesel and will remain in force until further notice. The government will absorb the remaining 6 percent VAT to stabilize domestic fuel prices and ease the cost of living.

MEF said the move comes as international oil prices continue to climb, driving up transportation costs and weighing on economic activity. The tax cut is part of broader efforts to support citizens and maintain purchasing power during a period of global price volatility.

Fuel importers and distributors must apply the reduced VAT rate on all domestic sales, while businesses under the self declaration regime are required to issue invoices reflecting the updated rate. Consumers will see pump prices calculated with VAT at 4 percent, lowering the tax burden embedded in retail costs.

Fuel prices remain stable, with regular gasoline at 5,400 riel ($1.35) per liter and diesel at 6,700 riel ($1.67).

The government clarified that businesses can continue to claim input tax credits based on the actual VAT paid, whether 10 percent or 4 percent, provided documentation is maintained. The General Department of Taxation will update its e Filing system to incorporate the new category, with authorities stressing strict compliance to ensure the policy’s intended impact.

The temporary relief underscores Cambodia’s strategy to mitigate external shocks while safeguarding affordability, particularly in fuel dependent sectors.