International Investors Call For Clarity in Kingdom's Trust Law

At a workshop with the American Chamber of Commerce (AmCham), foreign investors and business owners solicited a clearer explanation regarding the country’s Trust Law, which allows foreigners to indirectly manage real estate assets through trust management. 

The law has enticed many with the assurance of safely holding land in Cambodia, as the 1993 Constitution bars foreigners from owning land. 

Previously, investors had settled with using nominee structures or transacting with a land holding company when investing in the country. However, this had caused a shallow sense of safety and occasionally subjected them to hidden charges. 

The new Trust structure, in place since 2019, sought to address these issues and better protect investors. 

Nevertheless, the international business community seeks further clarification from the Kingdom’s General Department of Taxation, inasmuch as approximately $300 million in investor assets are now under said trust management. 

Director-General of the Trust Regulator H.E. Sok Dara assured those present at the AmCham workshop that the 2019 Trust Law “is guided by the three principles of providing certainty, security, and flexibility to the investor.” 

However, there remains a lack of details, which prompted panel moderators Clint O’Conell and Jonathan Blaine to concede that it was too early to provide definitive answers to the rest of the business community. 

O’Conell and Blaine represented DFDL Cambodia and DFDL Thailand, respectively.  

Blaine pointed out the need for clarity regarding taxation of salient steps with regards to creating a trust, such as when and how property settlement by a trustor may be taxed. 

Adam Fitzpatrick, IPS Cambodia’s country director, also the need for more comprehensive information. He shared that while he had never had negative encounters with foreign buyers under the previous nominee/company structure, there was certainly new interest in the recently implemented trust framework. 

“As a real estate company, we are unsure what the requirements are for valuations of property titles being transferred to the trust, as well as the potential capital gains tax implications,” said Fitzpatrick. 

Likewise, Hans Chen of Stronghold Trustee, highlighted that trust companies required a deeper level of expertise on Cambodia’s trust framework for the entire market to completely iron out any issues between investors, trustees, and regulators. 

With such a large and diverse turnout at the AmCham workshop, President Anthony Galliano named the trust framework a “game-changer.” 

He ensured participants that the organization’s Tax Committee will continue to advocate for all members and the rest of the international business community in fully understanding Cambodia’s Trust Law.