Cambodia and France Engage in Double Tax Avoidance Agreement Talks

Cambodia and France have entered the first round of negotiations on a double taxation avoidance (DTA) agreement to bolster tax cooperation and increase trade between the two countries.

Cambodia is currently a signatory to 11 DTAs. These include:

1. Indonesia;
2. South Korea;
3. Turkey (effect 2024);
4. China;
5. Hong Kong;
6. Macau (effect 2024);
7. Thailand;
8. Brunei;
9. Singapore;
10. Vietnam; and
11. Malaysia 

Under the DTAs, businesses enjoy a reduced income tax rate of 10 percent compared to the normal 14 percent.

Cambodia and France trade

The total trade volume between France and Cambodia reached US$542 million in 2022 with Cambodia enjoying a trade surplus. Exports to France for that year reached US$423 million while imports reached US$119 million.

Source: trading economics

Most of Cambodia’s exports were for apparel, knitted and not knitted, which reached over US$230 million in 2022.  This was followed by footwear and cereals.

Textile and garments: The backbone of Cambodia’s economy

Garments, footwear, and textiles manufacturing (GFT industries) continue to be the backbone of Cambodia’s economy, despite efforts to diversify. Altogether, the industries are the country’s largest employers with over 700,000 workers, and represent more than half of total export earnings.

Between January and July of this year, garments, footwear, and travel exports fell by 20.44 percent to US$6.27 billion, a decline from US$7.89 billion from the previous year, and reflecting sluggish global demand.

Overall, textile, apparel, footwear, and travel goods exports in the previous year amounted to US$12.5 billion, representing approximately 60 percent of the nation’s total export value and contributing 10 percent to Cambodia’s overall economy.

In addition, the reduction of the Everything But Arms (EBA) benefits by the European Union, the non-renewal of the Generalized System of Preferences (GSP) by the US, and the Ukraine-Russia conflict have also impacted GFT exports. An EBA status gives a country duty-free access to the EU market, and Cambodia was provided tax breaks and holidays for its manufacturing, tourism, agriculture, and property industries. The EU cited human rights abuses in Cambodia as the main reason for withdrawing the EBA status.

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