US Company Formation from Cambodia (2026): A Dollarised Economy, 14% Withholding, the New Capital Gains Tax, US Tariffs and the US LLC vs C-Corp Choice

Cambodia runs on US dollars. Rents, salaries, car loans and restaurant bills in Phnom Penh are priced in dollars, and most bank deposits are in dollars, so a Cambodian business receiving US payments does not face the currency problems found elsewhere in the region. Garment, footwear and travel-goods factories ship billions of dollars of goods to the USA each year. Phnom Penh and Siem Reap have a young digital workforce of developers, designers and marketers who serve foreign clients, and many foreign entrepreneurs run businesses from Cambodia.

A US company is useful to all of them, but 2025 and 2026 changed the background. US tariffs and transshipment rules now apply to Cambodian goods. The US Treasury's actions against the Prince Group and Huione have made US banks look more closely at anyone connected with Cambodia. And Cambodia introduced a 20% capital gains tax. This guide explains each of these, then the Cambodian tax rules and the choice between US LLC formation and US C-Corp formation.

In short: Cambodians and Cambodian residents can own 100% of a US LLC or C-Corporation, formed remotely. Cambodia taxes residents on worldwide income under the 2023 Law on Taxation. Tax on income is 20% for companies, and payments from Cambodia to non-residents carry 14% withholding. A 20% capital gains tax applies from 2026, including to share sales. There is no US–Cambodia treaty, so US corporate dividends carry 30% withholding. US banks apply enhanced due diligence to Cambodian applicants. With UCB, a Wyoming LLC with EIN is $249 and a Delaware corporation with EIN is $358, all-in.

Why US banks ask more questions in 2026

In October 2025 the US Treasury sanctioned the Prince Group, a Cambodian conglomerate it described as a transnational criminal organisation behind large-scale online scam operations, together with more than 140 related people and companies. On the same day, FinCEN issued a final rule cutting Huione Group, a Cambodian payments and crypto business, off from the US financial system as a primary money laundering concern. Further designations followed in June 2026.

Ordinary Cambodian businesses have nothing to do with these networks. But US banks and payment companies now apply enhanced due diligence to applicants linked to Cambodia. In practice they want:

• a clear, specific description of a real business with real customers;
• a website, social media and reviews that match that description;
• client contracts, invoices or export documents;
• the source of the money that will fund the company;
• no connection with sanctioned groups, their banks or their payment services.

A clean application from a Cambodian garment exporter, design agency or software company is still accepted. Vague descriptions such as "online marketing" or "digital services", or any connection with crypto payments, are not.

How Cambodia taxes the people and businesses involved

The Law on Taxation of 2023 is the framework.

• Residence: individuals with a domicile or principal place of abode in Cambodia, or present for more than 182 days in any 12-month period, are residents. Companies incorporated or with their place of management in Cambodia are residents.
• Worldwide income: residents are taxed on worldwide income, with credit for foreign tax.
• Tax on income (ToI): 20% for companies. Sole proprietors and small taxpayers are taxed under the ToI on their business income, with progressive rates for small taxpayers.
• Salary tax: progressive up to 20% on monthly salaries of employees.
• Withholding on payments to non-residents: 14% on services, interest, royalties, rent and dividends paid by a Cambodian taxpayer to a non-resident.
• Capital gains tax (CGT): 20% on gains from the sale of capital assets, including shares, from 1 January 2026. The start date for real estate has been deferred more than once.

For an owner of a US company:

• Work done in Cambodia is Cambodian income, whichever company invoices it.
• Dividends from a US corporation are foreign income, taxable in Cambodia with credit for US withholding.
• Selling shares in a US company may be subject to Cambodian CGT if you are resident.
• Payments by your Cambodian company to your US company for services carry 14% Cambodian withholding.

No US–Cambodia treaty

Cambodia has tax treaties with China, Singapore, Thailand, Vietnam, Korea and others, but not with the USA. US domestic withholding applies:

• 30% on dividends from a US corporation;
• 30% on royalties;
• 30% on related-party interest.

Combined with Cambodia's 14% withholding on outbound payments, flows between a Cambodian company and its own US company can be taxed on both sides. Keep the structure simple.

US LLC formation from Cambodia

US tax position

A single-member LLC with a non-resident owner is disregarded for US income tax. If the owner works from Cambodia and the LLC has no US office, employees or dependent agents, its income is generally not connected with a US trade or business and is not taxed in the USA (see effectively connected income explained). The LLC files Form 5472 with a pro forma Form 1120 every year, and the penalty for missing it is $25,000 (see Form 5472 explained).

Example: a UX designer in Phnom Penh

These are illustrative figures, not a client case. Amounts are in US dollars, as they would be in Cambodia.

Sokha is a UX designer in Phnom Penh whose clients are US start-ups. Two of them will only pay a US vendor. She forms a Wyoming LLC with a US business account, and the LLC bills US$48,000 a year.

• USA: no US tax, because the work is done in Cambodia. The LLC files Form 5472 and a pro forma 1120.
• Cambodia: as a resident, she declares the income as her business income under the ToI rules for her registration. Cambodian tax applies whichever way the money is routed.
• Banking: her application to the US bank describes her design services, lists her clients, and links to her portfolio. Funds arrive in her ABA or ACLEDA dollar account without currency conversion.

US C-Corp formation from Cambodia

US tax position

A US corporation pays 21% federal tax on its profits, plus state tax, and files Form 1120 and Form 5472 every year (see the 21% corporate tax explained and the C-Corp guide for non-residents). Dividends to Cambodia are withheld at 30%.

Exporters: tariffs, transshipment and the importer of record

Cambodia lost its US trade preferences under the Generalized System of Preferences in 2020. Since 2025, Cambodian goods have also faced the US "reciprocal" tariff, set at 19% under the 2025 arrangement, on top of ordinary duties. The USA applies a higher penalty tariff to goods it considers transshipped, meaning made largely elsewhere and routed through Cambodia, and has imposed anti-dumping and countervailing duties on some Cambodian products, notably solar cells.

A Cambodian garment, footwear or bag manufacturer that wants to sell directly to US brands or retailers, rather than through a foreign buying agent, can set up a US corporation to:

• act as importer of record, responsible for customs entries, duties and origin documentation;
• hold inventory in a US warehouse and sell to US retailers on delivered-duty-paid terms;
• employ US account managers and sign contracts under US law.

The US corporation pays US tax on its distribution margin. The Cambodian factory is paid for production at arm's-length prices. The factory's rules-of-origin records must show genuine Cambodian manufacturing, because the importer of record carries the risk of a transshipment finding. Speak to a US customs broker before the first shipment. See US subsidiary for a foreign company.

Other cases

• Start-ups raising investment, which need a Delaware C-Corporation (see raising US investment as a foreign founder).
• Qualified Investment Projects under Cambodia's 2021 Law on Investment with US customers that require a US contracting party.

Foreign residents in Cambodia

Many foreigners live and run businesses in Cambodia. Three points:

• US citizens remain US taxpayers wherever they live, and a US LLC they own is not foreign-owned.
• Other foreigners who are resident in Cambodia are taxed there on worldwide income, and may still be taxed at home.
• US banks look at nationality as well as residence. Holders of passports from countries under broad US sanctions face restrictions even while living in Cambodia.

Which state

• Wyoming or New Mexico for a services LLC run from Cambodia.
• Delaware for a corporation, an importer of record or a start-up.
• California or New Jersey if the importer's warehouse and staff are there, near the ports.

See best state for non-residents and the state selector.

What it costs

UCB's prices include state fees and the first year of registered agent service:

• Wyoming LLC with EIN: $249, or $348 with a US bank account application.
• Delaware corporation with EIN: $358.

A Wyoming LLC costs $121 a year to keep active, or $421 with the annual federal return. A US business address with your own suite number is $60 a year. See what a US LLC costs every year.

Documents

Use your Cambodian passport; the national ID card alone is not accepted by US banks. For proof of address, an EDC electricity bill, a water bill, or a bank statement, translated into English if it is in Khmer. Use the Latin spelling of your name exactly as in your passport, family name first or last, consistently on every document. Inconsistent name order is a common cause of delays for Cambodian applicants.

See US business bank accounts for non-residents, why banks reject non-resident applications and how to verify a US company is real.

Mistakes to avoid

• Vague business descriptions in US bank applications.
• Any link with sanctioned payment services, including receiving or sending funds through them.
• Treating income from work done in Cambodia as foreign because a US LLC invoiced it.
• Ignoring 14% Cambodian withholding on payments to your own US company.
• Shipping goods that may be treated as transshipped without origin documentation.
• Missing Form 5472 in a year when no US tax was due.

Frequently asked questions

Can a Cambodian own 100% of a US company? Yes. No US visa, Social Security number or visit is required.

Will US banks accept me? Yes, if your business is real and clearly documented. Expect enhanced due diligence because of recent US actions against Cambodian groups.

How does Cambodia tax income from my US company? Residents are taxed on worldwide income. Work you do in Cambodia is Cambodian income, and US dividends are foreign income with credit for US tax.

Is there a US–Cambodia tax treaty? No. US dividends, royalties and related-party interest paid to Cambodia are withheld at 30%.

Does my US LLC pay US tax? Not if it has no US office, staff or agents. It files Form 5472 and a pro forma 1120 every year.

How UCB can help

We form US companies for Cambodian owners remotely: the state filing, EIN, registered agent, US business address and bank application. We help you write a business description that answers a US bank's questions. Each year we file the federal return through our US tax filing service. See our formation, EIN and bank account package and the Thailand guide for the neighbouring rules.

Setting up a US company from Cambodia? WhatsApp us at +1 315 961 2956 or email enquiries@ucbsolutions.com.