Payment of Service to Individual

Withholding Tax on Service from Resident Individual-Cambodia Tax

Payment of Services to resident individual are subject to withholding tax (WHT) at 10%.  These services provided by individual ( not registered companies).

Withholding tax (WHT) is exemption if services provided by registered companies, and these supplies issued proper tax invoices to customers.

Companies (Customers) have responsibilities to withhold tax from service providers ( individual) before payment to individual as supplier.

For examples, services included office cleaning, computer repair, motor taxi, car taxi, consulting etc.

 Example 1:

Assume that XYZ Company hired Mr.B ,Khmer, to repair company computers. He charged $30 from XYZ Company. Assume $10 of $30 is repair materials.

Required:

Calculate Withholding tax (WHT)  that XYZ Company will withhold tax from Mr.B.

Answer 

WHT Base = $20 ($20=$30-$10,and $10 is material ,so materials are not subject to WHT)

WHT = $20 x 10% = $2

Note:

• -Mr.B received cash of $28 (30-2) from XYZ Company if Mr.B allowed XYZ withhold tax of $2 from him.
• -Mr.B received cash of $30 from XYZ Company if Mr.B did not allow XYZ withhold tax of $2 from him, so XYZ Company will pay $2 ( WHT) on behalf of Mr.B. In conclusion, total payment is $32.