Payment to Real Regime Taxpayer

Service Payment to company by issuing proper Tax Invoice

Services provided by registered companies are exemption from withholding tax (WHT) if registered companies ( services supplies) issued proper tax invoices to customers.

But if companies ( services suppliers) issued improper tax invoices, so customers ( companies) have responsibilities to withhold tax from services providers, so payment of services to resident companies that issued improper tax invoices are subject to withholding tax (WHT) at 15%. Read more: WHT for Improper Tax Invoice.

Example 1

ABC Company performed consulting service of $2,200 (included VAT) to MMM Company. ABC issued proper tax invoice ( amount before VAT $2,000 , VAT of $200 and total of $2,200) to XYZ Company.

Required

Calculate withholding tax on consulting service from ABC if any.

Answer

Because ABC Company issued proper tax invoice to XYZ company, so XYZ Company will not withhold tax from this consulting service of $2,200 except ABC issued improper tax invoice.