Payments which are subject to withholding tax
■ Dividend, interest, discount, charge, natural resource payments, rent, royalty, premium or retirement payments
■ Amounts received as winnings from lottery, reward, betting or gambling
■ Share of profit from partnership income
■ Income received from Gem auctions
■ Payments subject to PAYE;
■ Payments made by individuals unless made in conducting a business;
■ Interest paid to financial institutions on ordinary loans or advances;
■ Interest paid on Tbills and Tbonds; and
■ Payment that is exempt.
Who is a Withholding Agent?
– The person responsible for the deduction of withholding tax
Who should deduct?
– The person making the payment to any resident or non-resident person.
Time of deduction?
– At the time of payment or when credited to a bank account on behalf of the recipient
On what value should the tax be deducted?
– Gross amount of the invoice value (inclusive of all taxes other than VAT)
Obligations of the Withholding Agent
■ Registration with IRD
– If already have a TIN – Tax Type Registration
– If no TIN – from Primary Registration Unit/ Regional Office.
– Any tax withheld during each calendar month must be paid to CGIR – Peoples Bank Account No. 014-1002-6-9026620 by using the paying slip issued by the IRD
– Within 15 days from the end of the month.
■ Certificate of deduction
– Withholding Agent should issue a certificate of tax deduction to every withholdee.
– The withholding certificate covers a calendar month and be served within 30 days from the end of the month.
– Where the certificate is computer generated, it should contain the phrase “This is a computer-generated certificate. Therefore, no signature is required.”
■ Annual return
– Annual return should be filed on or before 30th April of the following year.
– Return should be furnished by all registered withholding agents even when no tax is paid.
– Schedules should be provided with the Return. Schedules are required to be furnished in electronic form (Excel csv format).
What happens if the tax is not withheld?
■ Any withholding agent, who fails to withhold tax, must pay the tax that should have been withheld in the same manner, and at the same time as tax that is withheld.
■ On default of payment, the withholdee is jointly and severally liable with the withholding agent for the tax, and the tax is payable by the withholdee within 15 days after the end of calendar month in which the payment is received.
■ A withholding agent who fails to withhold, but pays the tax, can recover an equal amount from the withholdee.