Withholding Tax on Non-Resident: Payment of Royalty, Rental/Leasing, and Income related to the use of Property
Some registered companies in Cambodia may rent / lease properties from other countries because investment in properties may be expensive for companies. Some cases local companies may buy intellectual properties from overseas to sell in Cambodia.
Withholding Tax on Non-Resident for payment of Royalty, Rental/Leasing, and Income related to the use of Property are subject to tax 14%, so local companies must withhold tax before payment otherwise companies will pay withholding tax on behalf.
Examples for payment of royalty are as follows:
- Copyright
- Franchise
- Patent etc.
Example 1
Assume that your ABC Company gets rights from US Company to publish Best Financial Accounting Book in Cambodia.
Contract between ABC Company and US Company required ABC Company pay royalty $10,000 for copyright.
Required:
Calculate withholding tax (WHT)
Solution:
WHT on book copyright = $10,000 x 14%=$1,400.
WHT on non-resident US Company for book copyright is $1,400.
Examples for rental are as follows:
- Machine rental
- Vehicle rental etc.
Example 2
Assume ABC Company in Cambodia manufactured and sold Product Y, but production machine is expense, so company decided to rent Machine from US Company. Rental fee per month is $50,000.
Required:
Calculate withholding tax on property rental.
Solution:
Withholding tax on property rental = $50,000 x 14%=$7,000
Withholding tax on machine rental is $7,000.