Withholding Tax on Resident: Example of Royalty for License
ABC Company purchased one computer from XYZ Company, a local VAT-registered supplier in Cambodia. Invoiced amount is $2,893 included VAT, and the cost breakdown including 10%VAT is as follows:
- Computer: $2,750
- Windows licence fee: $66
- Anti-virus licence fee: $44
- Installation charge: $33
Based on company’s accounting policy,these expenses ( excluded computer) are not required to be capitalised as fixed assets,but are recorded as “repair and maintenance expense”.
Required:
Calculate withholding tax if any.
Solution
XYZ Company is resident company in Cambodia, so license fee is subject to tax rate of 15%.
Withholding tax base ( before VAT)=(66+44)/1.1=$100
Withholding tax on license fee = $100 x 15%=$15
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