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Withholding Tax on Resident: Payment of Rental/Lease of Movable and Immovable Property

Withholding Tax on Resident: Payment of Rental/Lease of Movable and Immovable Property

Rental on movable and immovable property is subject to withholding tax (WHT) at 10%. Withholding tax on property will tax both individual and legal entities.


Movable Properties:

Movable properties refer properties that can be moved from place to another place.

Examples for movable properties are as follows:

  • Office equipment: computer, printer, scanner, machine copy etc.
  • Office furniture: table, chair etc.
  • Other movable properties: car, motor, truck, etc.

 Example 1:

ABC Company rent machine copy of $220 per month.

Required:

  1. Calculate WHT if ABC Company rent from individual.
  2. Calculate WHT if ABC Company rent from real regime company that issued proper invoice including VAT.

Solution:

1.Calculate WHT if ABC Company rent from individual.

WHT = $220 x 10%=$22

Withholding tax on machine copy rental is $22.

2.Calculate WHT if ABC Company rent from real regime company that issued proper invoice including VAT.

Amount before VAT = 220/1.1=$200

WHT = $200 x 10%=$20.

Withholding tax on machine copy rental is $20.


Immovable Properties:

Immovable properties refer properties that cannot be moved from place to another place.

Examples for immovable properties are as follows:

  • Land
  • Building
  • Land and building

Example 2:

ABC Company rent the following properties from different lessees:

  • Office from company of $1,100 including VAT.
  • Land of $500 from individual.

Required:

Calculate withholding tax (WHT) on property rental.

Solution:

Amount before VAT for office rental = $1,100/1.1=$1,000

WHT base = $1,000 + $500=$1,500

WHT = $1,500 x 10%=$150

Withholding tax on property rental is $150.

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