Hi,
My company - UK registered are invoicing an Ecuadorian company for sponsorship of an event. In order that they pay us the correct amount, they want us to add the 23% withholding tax that they will have to pay on our invoice to them?
Apologies, my knowledge of taxation is limited - however are we able to put this tax on our invoice (we have charged no VAT as not applicable - event is outside of UK and EU) I am advised that we are no able to put any form of tax on an invoice if we are not charging it, however they have shown me an invoice from another company they work with who were able to do this?
Any advice appreciated.
Replies (4)
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It seems to me that..
...the Excuador company wants to give you an agreed sum, but are required to deducted a withholding tax.
If they agreed to give you £100, then they want you to invoice them for £130. They will deduct 23% tax from that and pay you the net amount of £100. You are not accounting for the tax, they are.
Eh?
I don't follow you Haggis - in your scenario the UK company invoices £130 but only receives £100. They are then out of pocket by £30.00..............
Can't think of one...........
You would invoicing for something that wasn't true, and unless you know about Ecuadorian withholding tax you could find yourself liable to pay it. Also you would also be declaring a profit (and paying tax on) money that you had never received.