Establishing an Internet Service Provider (ISP) in Cambodia presents a promising opportunity due to the country’s growing internet penetration and economic development.
However, opening an Internet Service Provider (ISP) in Cambodia requires compliance with several legal, financial, and regulatory requirements. The process primarily involves business registration, obtaining a telecommunications license, meeting capital requirements, and providing a security deposit. Here are the details under Cambodian laws:
Business Registration
- Legal Entity: The ISP must be established as a legal entity, typically a limited liability company, and registered with the Ministry of Commerce (MoC).
- Tax Registration: The company must register with the General Department of Taxation (GDT) and obtain a taxpayer identification number.
Telecommunications License
The Telecommunications Regulator of Cambodia (TRC) oversees the issuance of licenses for ISPs under the Law on Telecommunications (2015). There are different types of licenses, depending on the scope of services the ISP plans to offer.
Common License Types for ISPs:
- ISP License (Internet Access Provider): This license allows the provision of internet services to consumers.
- Infrastructure License: Required if the company intends to build or operate telecommunications infrastructure (e.g., fiber optic networks, towers).
- International Gateway License: For companies that plan to connect Cambodia to international networks.
License Application Requirements:
- Company registration details,
- Business plan, including technical and financial aspects,
- Technical network design and rollout plan,
- Proof of qualified personnel or technical expertise,
- Financial capability to operate the service (see capital requirements below).
Capital Requirements
- Minimum Capital: The minimum registered capital for an ISP varies based on the type of license. The exact amount is not explicitly stated in the Telecommunications Law or TRC guidelines, but ISPs typically need to demonstrate substantial financial capacity to cover the cost of infrastructure, technology, and operational expenses. For example:
- National ISP License: Depending on the scale of operations, companies should demonstrate several million U.S. dollars in capital.
- Regional or Smaller ISPs: May have lower capital requirements but must still show adequate financial capability.
- Proof of Capital: When applying for the license, the ISP must submit financial documents proving their capital and investment capabilities, such as bank statements, financial guarantees, or investor commitments.
Security Deposit
- Deposit Requirement: ISPs are often required to provide a security deposit to the TRC as part of their licensing conditions. This deposit serves as a financial guarantee to ensure compliance with telecommunications laws and obligations, including service provision and customer protection.
- The deposit amount is typically set based on the scale of the ISP’s operations. For example, national or larger ISPs may be required to deposit $500,000 to $1 million, while smaller ISPs may have lower deposit requirements.
- Use of Deposit: In case of non-compliance with regulations or breach of license conditions, the deposit may be forfeited by the TRC.
Ongoing Financial Obligations
- License Fees: ISPs must pay an initial license application fee and annual license fees based on their revenue, service offerings, and scale.
- Contribution to the Universal Service Obligation Fund: ISPs may be required to contribute to this fund, which is intended to expand telecommunications services to underserved or rural areas.
- Telecommunication Service Tax: ISPs are subject to tax on their revenues, including corporate income tax and other applicable levies.
Compliance with Law on Telecommunications (2015)
- Data Protection and Interception Requirements: ISPs must comply with Cambodian regulations on data protection and cooperate with authorities on lawful interception and surveillance (Articles 6, 7 of the Telecommunications Law).
- Service Quality and Consumer Protection: ISPs must adhere to the TRC’s guidelines on service quality, fair pricing, and consumer rights protection.
- Reporting Requirements: ISPs are required to file regular reports on their operations and financial status to the TRC.
Foreign Ownership Restrictions
Foreign investors can own up to 49% of an ISP, but at least 51% must be owned by Cambodian nationals, as mandated by the Law on Investment. However, foreign entities can participate as strategic partners or technical investors.
Technical and Operational Requirements
- Network Infrastructure: ISPs must invest in building or leasing telecommunications infrastructure (e.g., fiber-optic cables, wireless towers).
- Interconnection and Peering Agreements: If the ISP intends to interconnect with existing service providers, agreements must be negotiated with those providers.
Taxation
- ISPs are subject to standard corporate taxes, including 20% corporate income tax and VAT on services provided. Compliance with Cambodian tax regulations is mandatory.
- In summary, starting an ISP in Cambodia requires significant capital, a security deposit, and compliance with various licensing, technical, and financial regulations. The specific capital and deposit amounts may vary depending on the scale of operations and the type of license obtained from the TRC.