Construction Contract Cost Plus Withholding Tax In Wake
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Withholding on payments to foreign persons Payments subject to withholding include compensation for services, interest, dividends, rents, royalties, annuities, and certain other payments. Tax is withheld at 30% of the gross amount of the payment. This withholding rate may be reduced under a tax treaty.
WHT is meant to curb income tax evasion and it is not a separate tax on its own. In contrast, Value Added Tax is a separate type of tax. VAT is a consumption tax payable on the goods and services consumed by any person whether government agencies, business organization or individual.
Calculating withholding tax is straightforward. Multiply the income by the tax rate. For example, paying ₦100,000 to a contractor with a 5% WHT rate, you deduct ₦5,000 and remit it to the tax authorities. Send the calculated tax to the authorities within the specified timeframe.
The applicable WHT rate on such payments ranges from 5% to 20%, subject to any relief available under the DTT. The tax withheld is deemed to be the final tax liability of the non- resident.
Ordinarily, an agent of independent status will be regarded as acting in the ordinary course of his business since his actions are not assumed to be controlled by the enterprise being represented. In such a case, he will be liable for the payment of 10% withholding tax on the agency fees or commission only.
The Withholding Tax Rate in Nigeria stands at 10 percent. Withholding Tax Rate in Nigeria averaged 10.00 percent from 2022 until 2024, reaching an all time high of 10.00 percent in 2023 and a record low of 10.00 percent in 2023. source: Federal Inland Revenue Service, Nigeria.
Withholding VAT is a method of collecting VAT where a portion of VAT is collected by appointed withholding VAT agents from payments made to a local supplier of Vatable goods and services. What is the amount of VAT to be withheld and remitted? The VAT to be withheld and remitted is 2% of the value of taxable supplies.
Definition. A contract where the contractor recovers actual costs incurred for completed work.
A contractor must provide you with a tax rate notification for contractors form (IR330C), which will inform you of their tax rate. If they do not provide you with an IR330C, you must deduct 45% from their payment for tax. If the contractor is a non-resident company, it is 20%.
Foreign resident capital gains withholding (FRCGW) applies to all (individual and non-individual) vendors (property sellers) selling or disposing of certain taxable real property (property).
