Cambodia Adopts Implementing Regulation for the 2021 Investment Law – Part One

On 26 June 2023, the Royal Government of Cambodia adopted Sub-Decree 139 (“Sub-Decree 139”) to establish a comprehensive legal framework for implementing the Investment Law dated 15 October 2021 (“2021 Investment Law”). The 2021 Investment Law introduces new regulatory framework to regulate investment projects and new investment incentives.

Sub-Decree 139 not only provides for detailed procedures for the registration of investment projects and the type of investment incentives, but also introduces a new negative list to provide more clarity on the projects that are ineligible for registration as a qualified investment project (“QIP”) with the Council for the Development of Cambodia (“CDC”) the Provincial/Municipal Investment Sub-committee (“PMIS”).

Investment project is expressly defined as referring to a ‘QIP’, ‘expansion of a QIP’, and ‘guaranteed investment project’.

We set out below the key legal elements of Sub-Decree 139.


Procedure for Registration of Investment Projects

The 2021 Investment Law has replaced the two-step registration process under the former law (with a single registration process via issuance of a registration certificate (“Registration Certificate”). A Registration Certificate includes a machine-readable bar/QR code or other technology that contains initial data about a registered investment project which can be used for other related registrations and implementation of the investment project.

In addition, under Sub-Decree 139, an applicant now has two options to register an investment project, either via submission of hard copy application or online application. Further, the timeline for issuance of a Registration Certificate is shortened from the 31 working days to 20 working days.

Interestingly, Sub-Decree 139 clarifies that the issuance of a Registration Certificate does not relieve an applicant from procuring other operating licenses and permits as required under applicable Cambodian laws. Nevertheless, Sub-Decree 139 states that a delay by the relevant competent authorities in issuing the required operating licenses without proper reasons does not impede the implementation of the investment project. The issuance date of the Registration Certificate is the commencement date of the project implementation.


New Negative List

Under Sub-Decree 139, investment incentives are available for QIPs if the scope of the investment does not fall under the list of ineligible investment activities (“Negative List”) or below the minimum investment capital thresholds, as prescribed in the Negative List stated in Annex 1 of Sub-Decree 139.

The new Negative List is comprehensive and includes a long list of specific business activities, classified based on four different investment sectors, being agriculture, services, industry, and infrastructure. Each investment sector contains specific business activities and the criteria to determine that the project is not eligible for QIP registration. In other words, an investment in a particular business activity would be eligible for QIP registration if the project does not meet the criteria stated in the Negative List.


Investment Incentives

Sub-Decree 139 provides very detailed incentives for the investors.

Please refer to our tax alert which provides detailed information on the investment incentives for the mentioned investment projects. You may access the alert by clicking on the following link:


Expansion of QIP Project

Sub-Decree 139 sets forth different forms that a QIP may be expanded, including (1) expansion of the existing production, (2) expansion through diversification of production target within the same production line; (3) expansion through the installation of new and modern technologies that increase productivity or protect the environment; (4) expansion of infrastructure serving basic telecommunication services or expansion in other forms as approved by the CDC/PMIS.


Purchase, Sale, or Merger of Investment Projects

Investment projects can be purchased, sold or merged by investors (defined as a person implementing an investment project registered with the CDC/PMIS). If a person wishing to acquire or merge an investment project is not yet considered an investor, such person must apply in writing with the CDC/PMIS (Article 22(2), Sub-Decree 139). While this is subject to further clarifications from the CDC, based on current practice, a normal commercial company (not being registered with the CDC) cannot acquire an investment project registered as a QIP.

Further, the sale, purchase or merge of investment projects without a prior approval from the CDC/PMIS will deprive the purchaser of the right to investment incentives, guarantees, and protections.


Certificate of Compliance

Under the former regulatory framework, investors are required to apply for the Certificate of Compliance (“COC”) within 90 working days of each financial year. However, Sub-Decree 139 requires the investment projects to submit semester and annual report to the CDC/PMIS within 20 days following the closing date for submitting tax returns in order to avoid losing its investment and tax incentives. Following the receipt of the semester and annual reports from the investors, the CDC/PMIS will issue a COC to the investors.


How will the 2021 Investment Law and Sub-Decree 139 Impact Existing QIPs?

The 2021 Investment Law states that the existing QIPs that receive tax on income exemption prior to the adoption of the 2021 Investment Law will continue to receive such tax exemption for the remaining period. However, the 2021 Investment Law and Sub-Decree 139 do not appear to clarify whether the existing QIPs are eligible for investment incentives and guarantees introduced by the new law.

In addition, any existing QIPs that have failed to apply for a COC from the CDC in the past years may now comply with the semester and annual reporting requirements and apply for a COC pursuant to Article 11(3) of Sub-Decree 139.


Our team at DFDL is readily available to assist you and address any concerns you may have on how to structure your projects pursuant to Sub-Decree 139.

Should you have any concerns or queries on the impacts of the above Sub-Decree 139 on you or your business, please contact us at: [email protected].