Cambodia & Taxes: H.E. Kun Nhim, “Establishing a transparent, efficient, and resilient customs system that supports development”

The General Department of Customs and Excise (GDCE) of Cambodia has announced a remarkable 21% increase in customs revenue for the first half of 2025 compared to the same period last year.

The department successfully collected approximately US$1,479 million during this period, which not only reflects a strong recovery from previous budget cycles but also highlights the effectiveness of ongoing reforms and strategic initiatives aimed at strengthening domestic revenue sources

The announcement was made at a meeting on July 11, chaired by H.E. Kun Nhim, Director General of the GDCE. The session provided an opportunity to take stock of the department's performance in the context of Cambodia's overall economic situation and the increasing complexity of international trade and taxation.

An important milestone in budget management

According to the official report presented at the meeting, revenue collected during the first half of the year represents approximately 58.6% of the total target set in the 2025 budget management plan. This achievement puts Cambodia on track to meet or even exceed its annual budget targets.

H.E. Kun Nhim expressed cautious optimism, noting that while the figures are encouraging, the department remains vigilant in the face of several emerging challenges.

“The growth in our customs revenue reflects not only increased trade activity, but also the resilience of our systems in a dynamic global and domestic environment,” he said.

Addressing complex challenges

The meeting highlighted several major obstacles that the GDCE must overcome to maintain and strengthen this momentum:

• Expansion of free trade agreements (FTAs): Cambodia's integration into a growing network of FTAs has opened up new opportunities but also created complexities. The implementation of these agreements requires careful monitoring to ensure compliance while maximizing tariff benefits.

• Transition to domestic production: Increased domestic production has led to a relative decline in import volumes, which are traditionally an important source of customs revenue. This structural change requires adaptive strategies to take advantage of new economic activities.

• Tax and customs incentives: To attract foreign and domestic investment, Cambodia has expanded its tax and customs incentives. While these incentives stimulate economic growth, they must also be carefully calibrated to avoid revenue losses.

• Changing car demographics: The rise of small-engine and electric vehicles poses new regulatory and tax challenges, as these categories are often subject to different customs and tax regimes than conventional vehicles.

• Sophistication of tax fraud: The department continues to combat increasingly sophisticated methods of tax fraud, which require enhanced control capacities and technological modernization.

The two pillars of the Cambodian tax system

The tax collection framework in Cambodia is based on two main institutions:

1. The General Department of Taxation (GDT): responsible for collecting national taxes, including income tax, payroll tax, value added tax (VAT), and property tax.

2. The General Department of Customs and Excise (GDCE): responsible for customs duties and excise taxes on imports and exports.

Synergy between these two agencies is essential to the country's fiscal health, as it ensures comprehensive coverage of internal and external revenue sources.

Economic context and implications

The sharp increase in Cambodia's customs revenue is part of a broader regional and global economic recovery. The country's strategic location as a gateway to ASEAN markets, along with the expansion of its manufacturing sector and trade liberalization efforts, have contributed to increased cross-border trade.

In addition, the government's commitment to modernizing customs procedures—through digitization, risk management, and capacity building—has improved efficiency and transparency, promoting greater compliance among traders and reducing opportunities for illicit activities.

H.E. Kun Nhim, Director General of GDCE

This increase in revenue not only strengthens Cambodia's fiscal position, but also provides essential funding for infrastructure projects, social programs, and economic diversification efforts.

This is particularly important as the country seeks to transition from a low-income economy to a middle-income economy by leveraging trade and investment.

Outlook: maintaining growth and innovation

As we approach the second half of 2025, the GDCE's priorities will be to:

• Strengthen technological integration: expand the use of advanced data analytics, blockchain, and AI to detect and prevent tax fraud and streamline customs clearance.

• Capacity building: train customs officials to manage the complexity of modern trade and compliance requirements.

• Refine policies: Continuously review tax and customs incentive programs to balance investment attraction and revenue protection.

• Engage stakeholders: Collaborate with businesses, professional associations, and international partners to promote a culture of compliance and mutual benefit.

H.E. Kun Nhim concluded the meeting by calling for a collective effort:

"Our success in customs revenue collection is a shared achievement. It reflects the dedication of our officers, the cooperation of the business community, and the support of the government. Together, we will continue to build a transparent, efficient, and resilient customs system that supports Cambodia's sustainable development. "

In summary, Cambodia's 21% increase in customs revenue in the first half of 2025 is a compelling indicator of the country's economic momentum and the effectiveness of its fiscal strategies. While challenges remain, the GDCE's proactive approach and commitment to innovation position Cambodia well to maintain this upward trajectory, thereby contributing significantly to national prosperity and regional integration.