Withholding Tax on Non-Resident: Payment of Dividend
Some registered companies in Cambodia may have foreign investors (owners) from other countries. Foreign investors will get dividends from local companies if Cambodia companies declared dividends, so local companies must withhold tax on dividends before payment otherwise companies will pay withholding tax on dividends on behalf investors.
Withholding Tax on Non-Resident for Payment of Dividend is subject at 14%.
Example
ABC Company is registered at Cambodia, and some shares of ABC Company are Japanese investors /owners. During December 2017, ABC Company declared and paid dividends to Cambodian and Japanese Inventors for $80,000 and $10,000 respectively.
Required:
1.Calculate withholding tax (WHT ) on dividends if any
2.Make Tax and Accounting record relevant to withholding tax
Solution
1.Calculate withholding tax (WHT ) on dividends if any
Dividends paid to Cambodian Investors/owners are not subject to withholding tax on dividends.
Dividends paid to Japanese investors are subject to withholding tax on dividends at 14%.
WHT on dividend = $10,000 x 14% = $1,400.
2. Make Tax and Accounting record relevant to withholding tax
Dr. Dividend* …………………10,000
Cr. Cash………………………..8,600
Cr. WHT payable……………1,400
Note: *dividend account is contra account of retained earnings (RE).