Buying a Cambodian Company? Who Inherits the Tax Bill Under Prakas No. 584
At a glance
On 29 July 2026, the Ministry of Economy and Finance (MEF) issued Prakas No. 584 on Tax Debt Liability for Business Transfers, Share Transfers, and Enterprise Mergers. It sets out how tax debts are allocated between sellers, buyers, incoming shareholders and surviving entities when a Cambodian business changes hands. Before this, Article 215 of the Law on Taxation stated only the broad principle that tax debts may pass to new owners, shareholders or surviving enterprises. The parties must notify the General Department of Taxation (GDT) within 15 working days. Incoming shareholders are liable in proportion to their shares, a merged entity takes on all tax debts, and a business transfer avoids 10% VAT only if the conditions are met.
MEF, administered by the GDT.
Taxpayers under the self-assessment regime involved in a business transfer, share transfer or merger.
Notify the GDT and update taxpayer information within 15 working days.
29 July 2026.
What must the parties file, and when?
The parties must notify the GDT and update the taxpayer's registration information within 15 working days after:
A new enterprise formed through a merger must also complete tax registration under the normal rules. Documents may be filed directly with the GDT or through the GDT HomeTax platform.
| Transaction | The 15 working days run from |
|---|---|
| Business transfer | The date of the business transfer agreement |
| Share transfer | The date of Ministry of Commerce (MOC) approval |
| Merger | The date of MOC approval |
Who inherits the tax debts?
Business transfers
Liability depends on the seller's legal form, whether it has completed tax clearance or deregistration, and whether it continues trading:
Depending on how a deal is structured and filed, historical tax debts can stay with the seller or pass in full to the buyer.
VAT: a business transfer is not subject to VAT if the notification and information-update requirements are met and the business continues under the buyer. Otherwise, VAT applies at the standard 10% rate. This aligns with Article 35 of the VAT Sub-Decree dated 11 March 2024.
Share transfers: Where a legal entity transfers, increases or decreases its shares, the incoming (successor) shareholders are liable for tax debts in proportion to their contributed shares, on the principle of limited liability. Where a partnership interest is transferred, the incoming partner is liable in proportion to the interest received. Published summaries also note that, in cases of tax fraud or tax evasion, shareholders may be held liable for the resulting tax debts in proportion to their ownership.
Mergers: Where two or more legal entities merge, the surviving entity or the newly formed entity is liable for all tax debts of the merged enterprises.
| Seller | Clearance / deregistration completed? | Pre-transfer tax debts | Post-transfer tax debts |
|---|---|---|---|
| Sole proprietorship or partnership | Yes | Seller | Buyer |
| Sole proprietorship or partnership | No | Buyer | Buyer |
| Legal entity that ceases business | Yes | Seller | Buyer |
| Legal entity that ceases business | No | Buyer | Buyer |
| Legal entity that continues business | Either | Seller | Buyer |
What this means commercially
- Share deal versus asset deal: In a share deal, the buyer takes on exposure in proportion to its shares. The target company also carries its own tax history into the buyer's ownership. A business transfer from a seller that continues trading leaves pre-transfer tax debts with the seller. Where the seller ceases business, that protection depends on clearance or deregistration being completed. A merger transfers everything. Structure is therefore a tax-risk decision.
- Tax due diligence: Because liability can follow the shares or pass in full on a merger, buyers should review the target's GDT filings, assessments, audits and any open disputes before signing.
- Warranties and indemnities: Transaction documents should allocate responsibility for pre-closing tax clearly. That means specific tax warranties and a pre-closing tax indemnity with practical recourse against the seller.
- Escrow, holdbacks and price adjustments: Where diligence identifies exposure, or the seller's ability to pay under an indemnity is uncertain, a portion of the price can be held in escrow, retained or adjusted. Each should be sized to the identified risk.
- Deal timeline: The 15-working-day clock runs from the agreement date for business transfers and from MOC approval for share transfers and mergers. Assign responsibility for the filing in the transaction documents. In a business transfer, missing the filing can also cost the VAT relief.
- Clearance as a closing condition: Where the seller is a sole proprietorship, a partnership or a legal entity that will cease business, completed tax clearance or deregistration decides whether historical debts pass to the buyer. Consider making it a condition precedent or a covenant backed by holdback.
What should buyers do now?
01 — Choose the structure with tax in mind
Compare share purchase, business transfer and merger options against the liability rules in Prakas No. 584 and the VAT conditions.
02 — Run focused tax due diligence
Review the target's filings, assessments, audits, disputes and tax regime.
03 — Confirm the seller's clearance position
For business transfers, establish whether the seller will continue trading or cease, and whether tax clearance or deregistration will be completed.
04 — Draft tax protection into the documents
Include tax warranties, a pre-closing tax indemnity, and escrow, holdback or price-adjustment mechanisms where justified.
05 — Check merger control
Test the transaction against the CCC pre-notification thresholds.
06 — Plan the post-closing filings
Diarise the 15-working-day GDT notification, assign responsibility for it, and keep the agreements, approvals and filing receipts.
Key takeaways
- Prakas No. 584 (29 July 2026) sets out the rules on tax liability in business transfers, share transfers and mergers.
- The parties must notify the GDT within 15 working days of the agreement date (business transfers) or MOC approval (share transfers and mergers).
- Incoming shareholders are liable in proportion to their contributed shares. A surviving or new merged entity is liable for all tax debts.
- In a business transfer, pre-transfer debts stay with the seller if it continues trading, or if it completes clearance or deregistration before ceasing.
- Business transfers avoid 10% VAT only if the filings are made and the business continues under the buyer.
How MLV Law Group can help
MLV Law Group advises foreign investors and acquirers on buying, selling and restructuring Cambodian businesses. Our transactional team can help structure your deal with Prakas No. 584 in mind, run legal and tax-focused due diligence alongside your tax advisers, draft warranties, indemnities and escrow or holdback arrangements, assess CCC merger-control requirements, and coordinate the MOC approvals and GDT filings that follow closing.
To discuss a proposed transaction, contact our team at legal@mlvlawgroup.com or +855 71 777 4168. For more context, see our practice areas on Mergers & Acquisitions, Merger Clearance and Tax.
Statutory Disclaimer
This note is general information on Cambodian law as at 3 October 2026. It is not legal advice and does not create a lawyer–client relationship. Statutes, prakas, instructions and administrative practice change. An engagement letter is required before MLV Law Group acts on any matter.
