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Withholding Tax on Non-Resident: Payment of Interest

Withholding Tax on Non-Resident: Payment of Interest

Some registered companies in Cambodia may borrow money or loan from other countries, so local companies must withhold tax on interest before payment otherwise companies will pay withholding tax on interest on behalf.

Withholding Tax on Non-Resident for Payment of Interest is subject at 14%.

Example 

ABC Company is registered at Cambodia, and borrows money from XYZ Company at Thailand. Loan from XYZ is $50,000, interest 2% per month, 5 year principal installment of $10,000 for each year.

Required:

  1. Calculate withholding tax (WHT )
  2. Make Tax and Accounting record if any

 Required:

1.Calculate WHT

Interest = $50,000 x 2%=$1,000

WHT = $1,000 x 14%=$140.

Withholding tax on interest is $140.

 2. Make Tax and Accounting record 

Dr. Interest expense………..1,000

Cr. Cash………………………………..860

Cr. WHT payable……………………140

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