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Withholding Tax on Resident: Example of Royalty for License

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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