VAT reduced from 10% to 4% from 20 March 2026
Cambodia has introduced a targeted VAT relief on fuel, cutting the effective VAT rate on gasoline and diesel from 10% to 4% as part of measures to ease rising energy costs.
Government absorbs majority of VAT
From 20 March 2026, suppliers must apply a reduced 4% VAT rate on domestic sales of gasoline and diesel. The government will absorb the remaining 6%, effectively subsidising fuel consumption while maintaining VAT system integrity.
This is a temporary measure, remaining in force until further government decision.
Clear invoicing and compliance rules
The Ministry of Economy and Finance has issued detailed guidance to ensure consistent application:
- Tax invoices (B2B): Businesses under the self-declaration regime must replace “VAT 10%” with “VAT 4%” on invoices
- Retail sales (B2C): Final consumers receive standard invoices with VAT embedded at 4%
- Input VAT recovery: Businesses can reclaim VAT based on the actual amount paid (either 10% or 4%), subject to valid documentation
To support compliance, the General Department of Taxation will update its e-filing system to include a new “VAT 4%” category within purchase and sales reporting.
Cambodia joins a growing list of countries using VAT as a short-term lever to manage energy-driven inflation pressures, while avoiding structural changes to the wider VAT regime.
