Payment of Movable and Immovable Property Rental/Lease

Withholding Tax on Rental Payment of  Movable and Immovable Property from Resident Lessors (Updated on 2021)

Rental payments of movable and immovable property to residents are subject to withholding tax (WHT) at 10%. Lessors of movable and immovable property are individual.

Lessees have responsibilities to withhold tax from rental expenses before payment to lessors (individual).

Movable properties are properties that can be moved from place to another place. For examples, movable properties included motor, excavator, bulldozer, roller, car, truck, machine copy etc.

Immovable properties are properties that cannot be moved from place to another place. For examples, immovable properties included land, building, land and building.

 Example 1:

XYZ Company rent excavators of $1,100 per month (included VAT) to BBS Company.

Required:

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

Answer 

No Withholding tax (WHT)  that BBS will withhold tax from XYZ Company because XYZ is company and issue proper tax invoice.

But if XYZ Company did not issue proper tax invoice, so BBS must withhold tax $110 ( $1,100 x 10%).

Example 2:

JJJ Company rent land of $2,000 per month from Mr.A, lessor.

Required:

Calculate Withholding tax (WHT)  that JJJ will withhold tax from Mr.A.

Answer 

Withholding tax (WHT)  that JJJ will withhold tax from Mr.A.

WHT Base =$2,000

WHT = $2,000 x 10% = $200

Note:

• -Mr.A got cash of $1,800 ( 2,000-200) from JJJ Company if Mr.A allowed JJJ withhold tax of $200 from him.
• -Mr.A got cash of $2,000  from JJJ Company if Mr.A did not allow JJJ withhold tax of $200 from Mr.A, so JJJ will pay $200 ( WHT) on behalf of Mr.A.