In a move aimed at fostering economic cooperation, Cambodia and France have embarked on the first round of negotiations for a Double Tax Avoidance Agreement (DTA). This agreement, once finalized, is expected to enhance trade relations between the two nations while providing tax relief for businesses operating across borders.

Cambodia is no stranger to DTAs, with agreements already in place with countries such as China, Singapore, and Vietnam. A DTA with France would be another step in Cambodia’s effort to boost foreign investment by mitigating the risk of double taxation. For France, the agreement offers greater access to Cambodia’s rapidly growing economy, particularly in the lucrative textile and agriculture sectors.

The total trade volume between Cambodia and France reached an impressive US$542 million in 2022, with Cambodia enjoying a significant trade surplus. Much of this trade consists of apparel and footwear exports, making France a key partner for Cambodia’s booming garment industry. Despite the global slowdown in demand for textiles, Cambodia’s government remains optimistic about the long-term potential of this agreement to stimulate economic growth.

However, while the DTA signals positive diplomatic progress, investors should remain cautious. Cambodia’s business environment, although improving, still poses challenges due to bureaucratic inefficiencies and governance issues. Experts suggest that businesses interested in taking advantage of the DTA’s benefits should maintain a flexible approach and be prepared to navigate the complexities of Cambodia’s regulatory landscape.

Overall, the DTA talks represent a step forward in Cambodia’s ongoing efforts to integrate further into the global economy. With France looking to strengthen its presence in Southeast Asia, both countries stand to gain from this agreement, provided they can finalize the terms to mutual benefit.