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Opinion: Reform Salary Tax to Decouple Family Rebates
- Mar 30
- 5 min read
Junior Research Fellow
Future Forum's junior research fellow, Vandeth Ngoun was published in The Cambodianess on March 30th, 2026. Check out the original article HERE, and read it below!
Although Cambodia does not impose a personal income tax, a similar levy, the Tax on Salary (TOS), which functions like a payroll tax, is in effect. Deductions from the monthly TOS base are permitted for dependent children and a spouse who is strictly a “housewife,” as stipulated in the TOS Prakas.
This mechanism, while intended to alleviate family burdens, embeds an implicit gender bias that reinforces traditional social norms, discourages women's workforce participation, and works against national goals for gender equality and economic diversification.
This commentary proposes two precise reforms to the TOS deductions: first, eliminating the legal requirement for spousal financial dependence (i.e., “housewife” status); and second, allowing both working parents to claim the deduction for dependent children, thereby supporting the equitable distribution of care costs.
Implicit Gender Bias in Tax Law
Under the Cambodian Tax Law and its associated administrative framework, "rebates" for resident taxpayers are primarily provided as reductions in the monthly taxable salary base.
These allowances are based on an employee’s family situation, specifically for minor dependent children at the time of payment or a spouse whose only occupation is that of a housewife.
The framework used to calculate the monthly tax base allows a resident employee — an individual who lives and works in Cambodia at least 182 days out of the year — to deduct 150,000 riel per month for a spouse, only if that spouse’s occupation is exclusively that of a housewife.
This structure mirrors outdated assumptions about gender roles — that men are the providers of household income and women are the caretakers.
Furthermore, if both spouses are working, the deduction for dependent children (150,000 riel per child per month) is available only to one spouse. Even though the language of tax law may be neutral on its face, the practical application often intertwines with prevailing societal norms, disproportionately disadvantaging women.
Reinforcing Gender Bias and Disincentivizing Second Earners
This tax design contributes to gender inequality in two significant ways. First, it reinforces traditional ideas of a “housewife” by institutionalizing economic dependence and perpetuating discriminatory social norms regarding the roles of men and women.
Second, it is a disincentive for second earners. The combination of limiting the spouse deduction to only women who are housewives and limiting the child deduction when both parents work can create disincentives, particularly for the secondary earner (who is predominantly female).
The time that Cambodian women spend on unpaid care work has risen from a little over three hours a day in the early 2000s to more than five hours in 2024, while men’s contribution to unpaid care and domestic work (UCDW) has grown to just over two hours per day, reinforcing a persistent gender gap.
This contributes to “time poverty” and acts as a significant barrier to women’s full participation in the economy. Given that Cambodia also faces a persistent gender wage gap (19%, due to discrimination) and women are often concentrated in low-wage or informal sectors, policies must actively encourage formal workforce participation, not subtly penalise dual-earning households.
Key Arguments for Reform
The goal must be to move beyond formal gender neutrality (gender-blindness) towards substantive equality by addressing implicit bias.
First, decouple the Deduction from Economic Dependence: The legal link between the spousal deduction and the role of “housewife” must be severed from Article 40 of the Law on Taxation and Article 68(2) of Prakas No. 575. The deduction should be reformed to recognise the marital or family unit itself, rather than mandating economic dependence, thereby enhancing women’s financial autonomy.
Second, universalise the Child Deduction: Remove the limitation that only one spouse can claim the child deduction (150,000 riel per child). This deduction should be claimable by both parents when both are working residents and mutually support the child(ren).
This repositions the deduction not as welfare relief targeted at a single breadwinner model, but as a recognition of the collective cost of care and human capital investment. This is crucial for strengthening incentives for women's labour supply.
The primary constraints on such a tax policy reform are fiscal costs and revenue collection. Broadening eligibility for both the spousal and child deductions would immediately reduce the monthly TOS base for potentially many resident employees, leading to an undeniable short-term decrease in tax revenue.
Furthermore, Cambodia's tax system is a self-assessment system that relies heavily on self-declarations, and expanding the complexity of family status verification (e.g., confirming "dependent child" status up to age 25 for students) poses administrative challenges.
Implementation Process (Who Should Do What and When)
The implementation of the proposed reform to decouple salary tax rebates from the status of a “housewife” and remove the single-spouse restriction on child deductions requires deliberate, coordinated action across fiscal and social policy bodies, structured into three distinct phases.
The initial phase needs an economic impact study to assess short-term revenue losses from broadening the deduction base versus long-term benefits. This is crucial as tax reform proposals often face hurdles due to perceived short-term costs.
The goal is to demonstrate that investing in increasing female formal labour participation yields long-term gains like higher tax revenue, better productivity, and fewer human capital losses.
This work mainly falls to the Ministry of Economy and Finance (MEF), which is responsible for tax laws and collaborating with the General Department of Taxation (GDT). As MEF oversees Public Financial Management reform, it can work with development agencies like UNDP, which plans a Care Economy Study under the Gender Equality Strategy (2025–2029) to quantify economic benefits such as increased GDP and labour income tax revenue, strengthening the case for investing in the care economy.
Following the economic justification, legal instruments must be formally amended. TOS regulations, including deductions for dependent children and a housewife spouse, are mainly based on the Law on Taxation, as detailed in Sub-Decree No. 48 and Prakas No. 575.
The MEF is responsible for this legal change, implementing the Sub-Decree and issuing Orders (Prakas) to establish rules. The amendments should remove the “housewife” requirement and allow only one spouse to claim the dependent children deduction.
The MEF should consult the Ministry of Women’s Affairs (MoWA), which leads gender equality policies, and should support UNDP’s partnership with MoWA for research to inform policy.
The final stage involves implementing and socialising the new tax rules to support working women and shared family responsibility.
This has two parts: (1) Technical Capacity Building, where MEF/GDT oversees applying the revised provisions, and local tax officials disseminate and explain tax types to taxpayers, focusing on obligations and rights. Training targets tax officials and employers to clarify deduction rules. (2) Public Dissemination and Social Change, where efforts to address societal biases that fueled the law are essential.
MoWA and partners, such as UNDP, should lead education and awareness campaigns to challenge discriminatory social norms, especially around unpaid care work, aiming to transform gender norms.
Rationalisation: Economic and Social Dividends
Despite the immediate fiscal burden, the long-term economic and social benefits of this reform significantly outweigh the costs. The current deduction is an example of implicit bias that reduces revenue potential by disincentivising the labour supply of the secondary earner, typically women.
By reforming the deduction, economic efficiency improves. Removing barriers to women’s formal participation is projected to generate long-term returns, including increased tax revenues, higher productivity and reduced human capital losses.
Gender Equality is advanced. It upholds the commitment to eliminating discrimination by removing a provision rooted in gender stereotypes. Tax policy should be used effectively to promote inclusive economic growth and address gender inequalities.
Unlock Women's Economic Power with Equitable Tax
In the pursuit of modernising the tax system, Cambodia has an opportunity to leapfrog outdated policies that implicitly disadvantage women.
By reforming the TOS deduction now, shifting focus from penalising working wives to valuing the shared cost of care, Cambodia can ensure its fiscal policies actively enable women's economic empowerment, translating national commitments into tangible household benefits and building a more resilient and equitable economy.
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