Starting a construction business in Cambodia

In 3 bullets

• Construction is driven by a property boom but stays highly competitive and tightly regulated since the Law on Construction of 2 November 2019, overseen by the Ministry of Land Management, Urban Planning and Construction (MLMUPC) (MLMUPC).
• Two layers of authorisation: a construction company licence (issued by the MLMUPC, or a permit from the provincial administration depending on the activity), then a construction permit per project whose issuing authority depends on the size of the works (MLMUPC — online services).
• The company’s technical director must be an architect or engineer registered with the Board of Architects or the Board of Engineers; taxation combines 10% VAT, withholding tax, patent tax and corporate income tax.

Overview: a booming but crowded sector

Construction is one of the engines of the Cambodian economy: residential towers in Phnom Penh, suburban boreys, hotels and resorts in Sihanoukville and Siem Reap. Demand stays strong, but the market is crowded: vertically integrated Chinese firms, Korean and Japanese groups, and a mass of small local contractors undercutting prices.

For a foreigner, two realistic positionings:

• General contractor: executing structural and finishing works, under an MLMUPC licence, with a qualified technical director.
• Project study and design office: architecture, structural engineering, MEP (mechanical, electrical, plumbing) — a services activity, less capital-intensive.

Step 1 — Set up the company (general setup)

Before any sector licence you need a legal entity. The standard is the Co. Ltd. (Private Limited Company), which foreigners can hold 100% for a construction activity:

1. Registration with the MoC via the single portal (Co. Ltd.: minimum capital 4M KHR ≈ 1,000 USD).
2. Tax registration with the GDT (company TIN).
3. Patent tax (annual business tax) due from year one.

The detail of structures and their taxation is covered in which structure to choose and the Private Limited Company. The patent tax has its own dedicated guide.

Step 2 — The construction company licence (MLMUPC)

This is the construction-specific step. The Law on Construction (Royal Kram NS/RKM/1119/019 of 2 November 2019), effective 3 November 2019, sets the principle: every construction business practice shall hold a licence granted by the MLMUPC, or a permit from the Capital/Provincial Hall administration depending on the type of activity (Law on Construction — MLMUPC e-Library).

Company licence vs professional licence

• Construction company licence: held by the company. Two main activity families — construction itself (structural works, execution) and project study and design (architecture, engineering). The licence is classed by the scale of projects the company is allowed to undertake (from small buildings to high-rise works) (MLMUPC).
• Individual professional licence: independent architects and engineers must be registered with the Board of Architects, Cambodia or the Board of Engineers, Cambodia.

Where to file

Licence applications and most acts (permits, certificates) go through the MLMUPC online public services portal, rolled out in April 2024, at service.mlmupc.gov.kh. Implementing texts (sub-decrees and prakas) are published in the ministry’s e-Library.

Step 3 — The construction permit, project by project

The company licence is not enough: each site must obtain its own construction permit before any works begin. Sub-Decree No. 224 of 30 December 2020 sets who issues the permit by the scale of the project (MLMUPC):

Who applies, and with what

The application is signed by the landowner and the project designer, who must be a licensed Cambodian architect (Sub-Decree 224 — MLMUPC). Filing is at the MLMUPC one-window service, which checks completeness before passing the file to the General Department of Construction for review. Typical documents:

• identity documents (and articles of association for a legal entity);
• land title/letter and the cadastral certificate;
• architectural plans and design documents (in several copies);
• inspection / compliance reports and a geotechnical survey;
• for the site-opening permit: the construction contract and a liability insurance certificate.

Small works exempt

Some works require no permit: very small structures (around under 12 m²), rural wooden houses below a set area, temporary ceremonial structures, small pagoda construction — to be checked case by case against the texts in force (MLMUPC e-Library).

Step 4 — Inspection, safety and warranties

The Law on Construction imposes an ongoing inspection regime, central to the safety framework:

• Periodic inspection of buildings: every 5 years for a non-residential building, every 10 years for a residential building (Law on Construction — MLMUPC).
• Design inspection and certification (structure, MEP) by licensed providers — an inspection-and-certification licensing regime was set out by prakas in 2021.
• Statutory warranties on the builder: around 10 years for reinforced-concrete structures, 5 years for exterior elements, 2 years for mechanical/electrical installations (Law on Construction — MLMUPC).

Step 5 — Taxation of a construction business

Once the company and licence are in place, the activity is taxed like any business, with specifics tied to works contracts:

• VAT 10% on invoiced construction services (works contracts, design services), filed monthly (Value Added Tax — GDT). See the VAT guide.
• Withholding tax (WHT): to anticipate on subcontractors and providers. A payment to a resident unregistered subcontractor (no valid VAT invoice) bears 15%; a payment to a non-resident provider (foreign architect or engineering office) triggers 14% on Cambodian-source income. On a site, the subcontracting chain multiplies these withholdings — see the withholding tax guide.
• Annual patent tax (category by turnover).
• Tax on Income (TOI) 20% on the company’s profit — see the corporate income tax guide.
• ToS on wages paid (progressive up to 20%) and NSSF from 8 employees.

Common pitfalls

FAQ

Do you need a licence to open a construction business in Cambodia?

Yes. Since the Law on Construction (2019), every construction activity must hold a company licence issued by the MLMUPC (or a permit from the provincial administration depending on the activity). The licence requires a technical director who is an architect or engineer registered with the relevant Board. See MLMUPC.

What is the difference between the company licence and the construction permit?

The company licence lets your company carry on the construction activity (classed by project scale). The construction permit is issued site by site, before works; the authority depends on size: MLMUPC above 3,000 m² or 11 floors, province/capital between 500 and 3,000 m², district/khan below (Sub-Decree 224).

Who applies for the construction permit?

The application is signed by the landowner and the designer of the project, who must be a licensed Cambodian architect. Filing is at the MLMUPC one-window service; the decision comes within 15 to 45 working days depending on the level of authority.

Can a foreigner run a construction business?

Yes: the Co. Ltd. can be 100% foreign-held. But the company must rely on a technical director who is a locally registered architect/engineer, and the foreigner can never own the land of the projects outright (the Constitution reserves that to nationals) — a point to handle contractually with the project owner.

Which taxes weigh on a site?

VAT 10% on construction services, corporate income tax (20%), the patent tax, ToS on wages, NSSF from 8 employees, and above all withholding tax on subcontractors (15% resident unregistered) and foreign providers (14%). WHT on subcontracting is the line most often forgotten in pricing.

How long to be operational?

Allow 2 to 4 weeks for the company (MoC + GDT), plus the time to build the MLMUPC licence (recruiting the registered technical director, preparing the file). Then each site adds 15 to 45 working days for the construction permit depending on the competent authority. A local firm and a technical director already identified speed up the launch substantially.