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WITHHOLDING TAX - Coggle Diagram
WITHHOLDING TAX
Mechanism
when NR receives certain Msian derived Y, taxable in Mas
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Where WT applies, payer shall required
- deduct WT upfront
- pay only net amount to NR
- render an acc & remit amount of tax withheld to DGIR within 1 month after paying/crediting recipient
S109
- payer must pay royalty/interest
- any other person who known to him as NR
- royalty derived from Mas
Royalty derived from Mas
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if responsibility for payment of royalty lies with Gov, State Gov or local authority
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- not applicable if royalty/int is attributable to buss carried on by NR in Mas via office,branch
- WT paid under S109 is final tax
- no need for NR to report royalty/inc in return to DG
- payer has to deduct WT pay to DG within 1 month after date of paying/crediting such fee to NR
S109B
- payer pays special classes of Y
- to NR
- derived in Mas
Special classes of Y
S4A(ii)
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HO day to day admin exp
- imposed on services of routine nature
- by NR HQ to Msian branch
- by NR parent co to Msian subs
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Reimbursement
- out of pocket incurred by payee
- in course of rendering services to payer
- in respect of use any moveable property
- subsequently reimburse by payer
tax treatment
- treated as part of contract value
- income of payee under S4A and subject to WT at rate 10%
Disbursement
- out of pocket expenses are exp incurred by payer and paid to 3rd party on behalf of payee
- in connection with services rendered by payee or
- in respect use of any moveable property
- payer bear exp, cannot claim back fr payee
tax treatment
- part of contract value
- income of payee under S4A and subject to WT at rate 10%
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Depo and adv payment
non refundable for service rendered/in respect of the use of any moveable property are subject to WT
if depo is refundable, no WT
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S4A(i)
Amount paid to NR for employee's services in connection
- use of property/rights belonging to NR
- installation/operation of any P&M purchased fr NR
- In Mas
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Tax implication
- in case where WT on payments made to NR are paid & borne by payer, WT computed on amount paid to NR
- WT paid not rank for deduction since it is not an expense wholly & exclusively incurred for production of payer's GI