Cambodia’s VAT agenda in the first half of 2026 has been driven almost entirely by the government’s response to rising global commodity prices. Three distinct measures — a food VAT exemption running to 2028, an emergency fuel VAT cut in March, and a further deepening of that cut in April — each follow the same structural logic: the state absorbs the VAT liability, allowing businesses to invoice at the reduced or zero effective rate while the General Department of Taxation (GDT) covers the difference. Alongside these relief measures, the GDT launched a new online platform to streamline the process of requesting the state-borne VAT certificates these incentives require. Together the developments reflect a tax administration that is using VAT as an active fiscal tool to manage inflation and cost-of-living pressures, rather than as a stable revenue base.
VAT Exemption on Locally Produced Basic Foods: 2026 to 2028
Effective 1 January 2026, Cambodia exempted VAT on the domestic supply of locally produced basic food items, with the state absorbing the full 10% VAT liability through the end of 2028. The measure was authorised by Prakas signed by Deputy Prime Minister and Minister of Economy and Finance Aun Pornmoniroth on 17 November 2025 and applies to taxpayers under the self-declaration regime.
The qualifying products are defined explicitly and include: livestock meat (fresh or processed by steaming, frying, fermenting, marinating, or smoking); all types of livestock eggs (fresh or processed); fresh or saltwater fish, lobster, shrimp, clams, crabs, and shellfish (fresh or processed); all types of sugar excluding candy; salt, fish sauce, and soy sauce. The exemption does not apply to the same items when supplied by restaurants.
To access the state-borne VAT, eligible suppliers must: obtain a state-borne VAT certificate from the GDT; attach a list of suppliers of goods or services to each monthly VAT declaration; maintain accounting records in accordance with applicable law; and submit monthly and annual tax declarations on time. Suppliers of domestic palm oil products used as raw materials for animal feed must additionally attach a list of receiving enterprises to each monthly declaration. Retail sector businesses — grocery stores and similar operators — must ensure proper issuance of state-charge VAT invoices and maintain supporting documentation to avoid future audit risk.
The measure is a continuation and extension of similar state-borne VAT relief that had been in place for previous periods. The 2028 end date gives producers, farmers, and food sector entrepreneurs a three-year horizon of cost certainty, which industry representatives welcomed while calling on the government to also address broader input costs including electricity, water, fertiliser, and labour.
Emergency Fuel VAT Cut: Gasoline and Diesel to 4%, Then Diesel to 0%
Rising global oil prices triggered a rapid sequence of fuel tax interventions in March and April 2026, each using the same state-burden mechanism as the food exemption.
20 March 2026 — VAT on gasoline and diesel cut to 4%. The Ministry of Economy and Finance issued Instruction No. 003 reducing VAT on the import and domestic supply of regular gasoline and diesel from 10% to 4%, with the state absorbing the remaining 6%. The measure was framed as part of a broader package: the government simultaneously cut import duties on fuel to zero, reduced excise taxes on gasoline and diesel, and ordered a retail price reduction of 6.5 US cents per litre with a further 1 US cent if international prices exceeded USD 90/barrel (gasoline) or USD 100/barrel (diesel). At the time of the announcement, gasoline was priced at 5,400 riel (approximately USD 1.35) per litre and diesel at 6,700 riel (approximately USD 1.67) per litre. Xinhua confirmed that since the onset of the Middle East conflict, regular gasoline prices in Cambodia had risen 40% and diesel prices had risen 74%.
From a compliance standpoint, fuel importers and distributors were required to update VAT invoicing to reflect the 4% rate and the GDT updated its e-Filing system to incorporate the new VAT category. The Ministry of Economy and Finance subsequently issued clarifying guidelines to wholesalers on three key principles for implementation. Businesses under the self-declaration regime were instructed to issue invoices reflecting the updated rate. Input tax credits remain claimable based on actual VAT paid, whether at 10% or 4%, provided documentation is maintained.
1 April 2026 — VAT on diesel and LPG cut further to 0%. Within two weeks of the initial cut, the GDT published a further instruction reducing VAT on diesel and liquefied petroleum gas (LPG) to 0%, with the state now absorbing the full 10% VAT liability on these products. The 4% rate on regular gasoline was maintained and was not covered by the April instruction. As with the March measure, the April cut applies until further notice from the Royal Government, meaning businesses must monitor GDT announcements for any reinstatement of the standard rate.
GDT Online Platform for VAT Incentive Applications
On 3 January 2026, the GDT issued Instruction No. 076 GDT implementing a dedicated online function within its Incentive Request Management System (IRMS) — accessible through the GDT’s Tax Certificate Management System — for requesting state-borne VAT certificates. The system is available through the GDT’s e-services portal.
Prior to this, applications for VAT incentives required physical paperwork and in-person submission. The new system allows enterprise owners, taxpayers, and tax service agents to submit applications digitally, reducing processing times and administrative burden. For projects receiving VAT incentives, applicants submit enterprise and project information, Master List and Supplier List data, and supporting documents approved by the Ministry of Economy and Finance or the Council for the Development of Cambodia (CDC). Contracts or agreements related to project implementation must also be included. Updates to approved Master or Supplier Lists are submitted through a dedicated Request List function within the system.
For agricultural enterprises benefiting from state-borne VAT, the system requires applicant and enterprise information, a complete supplier list, and contracts for goods or services with each supplier where applicable. The GDT emphasised that all submitted information must be reviewed and verified for completeness and accuracy before submission, and that the system provides transparency and a digital audit trail for each application.
VAT Framework and Rate Structure
Cambodia’s VAT system applies a standard rate of 10% to most taxable supplies of goods and services, including imports. The zero rate (0%) applies to exports of goods, international air and sea transport services, and — following the April 2026 instruction — effectively to the domestic supply of diesel and LPG while the state-burden instruction remains in force. The state-borne VAT mechanism means the nominal 10% rate formally remains on the statute; the economic relief is delivered through the state absorbing the liability, not through a legislative rate amendment.
VAT registration is required for businesses with annual taxable turnover exceeding KHR 125 million (approximately USD 30,000). Foreign businesses supplying electronic commerce services to Cambodian consumers — including streaming, cloud services, SaaS, online advertising, digital content, and telecommunications — are required to appoint a local tax representative and register with the GDT. VAT returns and payments are due by the 20th of the month following the reporting period.
