Sole Proprietorship in Cambodia: What Expats Need to Know (2025)

If you’re an entrepreneur or digital nomad searching for a streamlined way to operate as a sole proprietor in Cambodia, you’re likely frustrated by the maze of tax regimes and business statuses worldwide. Many countries offer simplified business statuses—think France’s auto-entrepreneur or Guatemala’s pequeño contribuyente—that let you invoice clients without the burden of full company registration. But what’s the reality in Cambodia in 2025? Here’s a data-driven breakdown to help you make informed decisions and optimize your fiscal strategy.

Understanding Sole Proprietorship Status in Cambodia (2025)

Unlike some jurisdictions, Cambodia does not offer a sole proprietorship status equivalent to the micro-entrepreneur regimes found in Europe or Latin America. According to the latest data:

• No simplified sole proprietorship status exists—there is no direct equivalent to France’s auto-entrepreneur or similar micro-business regimes.
• Individuals can register as a sole proprietorship (individual enterprise), but this requires formal business registration with both the Ministry of Commerce and the General Department of Taxation.
• All businesses, regardless of size, are treated as legal entities for tax and regulatory purposes.

What Does This Mean for Small Businesses and Freelancers?

Every business—no matter how small—must register and comply with Cambodia’s standard tax obligations. There is no legal way to invoice clients as an individual without creating a registered business entity. This is a crucial distinction for those used to more flexible regimes elsewhere.

Pro Tips: Navigating Cambodia’s Business Registration and Tax System

While Cambodia’s system may seem rigid, there are still ways to optimize your compliance and minimize friction. Here’s how:

1. Pro Tip #1: Register Early and Correctly
   Begin your business registration with the Ministry of Commerce and follow up with the General Department of Taxation. Early registration helps avoid penalties and ensures you’re operating legally from day one.
2. Pro Tip #2: Understand Your Tax Obligations
   All registered businesses must pay the Patent Tax, and if your turnover exceeds certain thresholds, you may be liable for Value Added Tax (VAT) and income tax based on turnover or profit. There’s no micro-entrepreneur exemption—plan your cash flow accordingly.
3. Pro Tip #3: Keep Meticulous Records
   Since Cambodia treats all businesses as legal entities, robust bookkeeping is essential. This not only ensures compliance but also helps you optimize deductions and minimize your taxable base.
4. Pro Tip #4: Monitor Regulatory Changes
   Regulations can evolve. Stay updated via official sources like the General Department of Taxation FAQ and reputable regional briefings such as ASEAN Briefing.

Case Example: Freelancer vs. Registered Sole Proprietor

Imagine a freelance web developer relocating to Cambodia in 2025. Unlike in some countries, they cannot simply invoice clients as an individual. Instead, they must:

• Register as a sole proprietorship (individual enterprise)
• Obtain a business license and tax registration
• Comply with all standard tax filings and payments

This means higher administrative overhead, but also the potential for more robust legal protections and access to business banking.

Summary: Key Takeaways for 2025

• Cambodia does not offer a simplified sole proprietorship or micro-entrepreneur status.
• All businesses, including individual entrepreneurs, must register and comply with standard tax obligations.
• There is no legal way to invoice clients as an individual without a registered business entity.
• Staying compliant requires careful registration, diligent record-keeping, and ongoing attention to regulatory updates.

For more details, consult the following official resources:

• General Department of Taxation: Business Registration
• Ministry of Commerce: Business Registration
• ASEAN Briefing: Setting Up a Business in Cambodia
• General Department of Taxation: FAQ