PM asks real estate sector to make use of incentives
PM asks real estate sector to make use of incentives
Prime Minister Hun Manet expressed the hope on Monday that the extension and addition of tax incentives until the end of 2025 will help housing developers and property owners and drive the growth of the real estate sector in the country.
The Prime Minister said in a Facebook post that the government decided to extend tax incentives for property owners and registered housing developers until the end of next year to help reduce their tax burdens and also to accelerate economic growth.
The move was taken to counter the slowdown in the real estate sector and in the expectation that the sector will gradually turn to the path of recovery in line with current economic trends.
“I hope that this tax incentive will support and create favourable conditions for housing developers, investors and all property owners to contribute to the Royal Government’s agenda to develop the real estate sector and help the Cambodian economy grow stronger,” Mr Hun Manet said.
In the letter released on Monday, Ly Hour, President of the Housing Development Association of Cambodia, expressed appreciation to the Prime Minister for the decision to continue the extension and addition of tax incentives for the sector Real estate until the end of 2025.
“The Prime Minister’s decision to help reduce the tax burden concurs with the mission of the Royal Government to develop the real estate sector and help the Cambodian economy to grow further,” he said.
Noun Rithy, Chairman of the Board of KFA Group and one of real estate developers in Cambodia, told Khmer Times that the government’s decision to reduce taxes is a good sign as it has encouraged more property developers to invest in the sector.
The real estate sector in Cambodia is mainly affected by external factors and the global economy. It is also related to foreign direct investment and the growth of tourism, he said.
Currently, the global economic crisis has affected people’s incomes making house purchases not affordable, Rithy said, adding that, in addition to the above two sectors there are many other relevant sectors that drive real estate growth such as agriculture and industry.
“We really want to propose tax exemption for a long time, but it depends on the situation, because the government is not indifferent, as we have already seen,” he said.
“This is expected to help the construction sector to recover between 2025 and 2029. But it also involves external factors,” Rithy said.
According to a report from the Ministry of Economy and Finance, the real estate sector in 2024 is expected to grow at a slower pace of around 1.2 percent. Stamp duty exemption on affordable housing equivalent of $70,000 or below will contribute to the promotion of low-cost housing sales.
Based on data from Knight Frank, real estate sales of condominiums and housing (Borey) increased by 16.8 percent and 0.5 percent in the first half of 2024 compared to the same quarter in 2023.
However, overall real estate activity continues to be supported by retail mall rental activities. In fact, in the first quarter of 2024, based on CBRE data, retail rents, especially in prime locations, increased by eight percent year-on-year compared to the first quarter of 2023.
Cambodia’s construction sector has attracted a total of $2.53 billion in investment capital in the first half of 2024, falling eight percent from the same period last year, according a report from the Ministry of Economy and Finance (MEF).
According to a report by the Ministry of Land Management, Urban Planning and Construction, the Cambodian government licensed 1,642 construction projects during the January-June period, down 11 percent from last year. Approved projects include housing development, condominiums, industrial and commercial areas, resorts, tourism and hotels.
It may be noted MEF has issued Notification No. 014 to extend and add tax incentives for property owners and registered housing developers through tax reliefs. It provides exemptions from various taxes, including stamp duty, capital gains tax, property tax and unused land tax, available until the end of 2025.
Notably, housing transfers within registered Borey developments valued at $70,000 or less are exempt from stamp tax, and properties exceeding this value receive a $70,000 deduction in their tax base. These incentives require accurate sale contract documentation reflecting market values.
Capital gains tax on real estate owned by individuals is postponed until the end of 2025, and other capital gains tax applications will commence from that year. Property taxes on agricultural land used for cultivation remain exempt, and residential land used for agriculture may qualify if certified by local authorities.
Additionally, incorrect property tax filings before 2025 will not be reassessed, with penalties waived until mid-2025. The unused land tax is also suspended until the end of 2024, after which exemptions may apply for land dedicated to agriculture or economic activities that meet specific criteria.
The MEF’s recent Prakas 576, effective January 2025, introduces updates on immovable property tax. Key changes include a tax amnesty for registration and underreported tax, alongside exemptions for certain agricultural properties.
Immovable properties worth less than KHR100 million are exempt from the 0.1 percent tax rate, and other exemptions cover government-owned property leased for business, religious or charitable properties, foreign diplomatic missions, and infrastructure-related immovable properties. Immovable properties in Special Economic Zones (SEZ) used for agricultural, industrial, or service purposes are also exempt, as well as buildings less than 80 percent completed and not in use.
