Real estate experts believe the government’s decision to extend certain tax exemptions for the real estate and construction sector until the end of 2024 is a strategy intended to stabilise the market and create a conducive transactional environment, as well as draw more investors to Cambodia.

The Ministry of Economy and Finance issued a January 4 notification on the “Continuation of tax exemption principles, additional tax preferences and extensions and suspension of tax practices for the real estate sector”, reflecting the government’s ongoing strategy.

The ministry said the decision aligns with the resolutions of the 19th Government-Private Sector Forum in November 2023. 

It underscores the ministry’s commitment to upholding the principle of tax exemption and introducing some additional tax incentives in the sector.

The government’s support for real estate and construction encompasses four primary areas. 

The first is the ongoing stamp duty exemption on the transfer of ownership or possession of all housing types, specifically boreys (gated communities), valued at $70,000 or less, until the end of 2024. For each borey unit exceeding $70,000 in value, the policy permits a deduction of $70,000 from the stamp duty base.

The second area involves the continued deferral of six types of capital gains tax, which include real estate, leases, investment assets, business brands, intellectual property and foreign currency. 

The third and fourth points focus on property tax and the tax on unused land, respectively.

Strategy to maintain market stability and attract direct investment Sam Soknoeun, president of the Global Real Estate Association, told The Post on January 15 that the ongoing exemption of property taxes, along with some unused land taxes, has played an important role in stabilising the real estate and construction markets, given the sector’s continued challenges due to international crises. 

A view of the Phnom Penh skyline.Hong Menea

“This is to facilitate easier transactions for middle- and lower-middle-income individuals in housing, without the added burden of stamp duty for properties under $70,000. Unused land of less than five hectares is also granted preferential treatment,” he explained.

Regarding foreign financing in the Cambodian real estate and construction sector, Soknoeun noted that the current level of foreign investment is still modest compared to the pre-pandemic era.

Dith Channa, CEO of Lucky Realty Co Ltd, said that extending the property tax exemption is instrumental in stabilising and enhancing the sector, especially after a series of crises in the past three to four years. 

He noted that tax facilitation eases the burden on taxpayers, allows them breathing space during crises and encourages increased investment.

“Easing tax obligations can moderately boost the activity in the real estate and construction markets,” he said. 

He added that facilitation plays a role in creating an attractive environment for investors to establish more businesses and factories in the country. 

“Certainly, when real estate costs are lower, it piques the interest of financers in direct investment. However, a stagnant or problematic real estate market may drive investors to other countries,” he stated.

Channa, a real estate expert with over a decade of experience, remarked that as of 2024, the sector had not yet returned to its pre-2019 condition.

“Due to their inherent need for more time and investment resources compared to other sectors, the real estate and construction industries in Cambodia are yet to show significant recovery signs, even as other sectors begin rebounding from the Covid-19 crisis that began in early 2020,” he explained.