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:
- Calculate withholding tax (WHT )
- 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