Payment of Management Fee and Technical Services

Withholding Tax on Management Fee and Technical Services from Non-Residents

If resident companies in Cambodia hire non-resident individual or companies outside of Cambodia for Management Fee and Technical Services , so Payment of Services to non-residents are subject to withholding tax (WHT) on services at 14% (standard rate).

Resident Companies (Customers) in Cambodia have responsibilities to withhold tax from Management Fee and Technical Service providers ( non-residents) before payment otherwise resident companies will pay withholding tax on Management Fee and Technical Service on behalf of non-residents.

 Example 1

Assume that Resident XYZ Company in Cambodia hired non-resident ABC company ( foreign company outside of Cambodia) for technical service. ABC company charged $3,000 from XYZ Company.

Required:

Calculate Withholding tax (WHT) on technical service  that XYZ Company in Cambodia will withhold tax from non-resident ABC company.

Answer 

WHT Base = $3,000

WHT = $3,000 x 14% = $420

Note:

• -ABC  Company received cash of $2,580 ($3,000-420) from XYZ Company if ABC allowed XYZ withhold tax of $420.
• -ABC  Company received cash of $3,000 from XYZ Company if ABC did not allow XYZ withhold tax of $420, so XYZ Company will pay $420 ( WHT) on behalf of ABC. In conclusion, total payment by resident XYZ company in Cambodia is $3,420.