Uk company sold goods (artwork) to China - the contract refers to withholding tax being deducted from the payment to be made.
The contract price is quoted in Yuan and paid in US Dollars and there is no reference to the amount of withholding tax that has been deducted.
Research does not make it clear what the rate would be.
Any help much appreciated - in case it makes any difference the payment was made in December 2020.
Thank you in adavnce.
Replies (5)
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1. UK contracts may refer to VAT, without it being added.
2. If tax was withheld, it may be recoverable in China and be of no UK tax consequence.
My VAT point was that referring to a tax in a contract does not create a liability to that tax. (It's included to determine which party pays any liability that arises.) However your reply suggests the supply was made in the course of business and if so the supplier ought to be able to recover the tax in China (Article 7 of the DTA).
And I didn't say would. I said may. You haven't provided enough information for me to know. My point was I think it's s25 TIOPA may prevent credit relief - and does so if Article 7 is in point. (You could perhaps still get a deduction for foreign tax if decide not to reclaim in China, but in effect you've already had that because you know what was received after any tax.)
"The contract price is quoted in Yuan and paid in US Dollars and there is no reference to the amount of withholding tax that has been deducted."
Why not ask the Chinese customer how much (if any) withholding tax they withheld? Since they made the payment, it's more likely they know than that someone on here does.
Just a thought.