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bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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I am looking on recovering withholding tax from various

Resolved Question:

I am looking for advice on recovering withholding tax from various countries.
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
SBS supply subsea engineers (all bona-fide sub-contractors) to various drilling contractors (Diamond, Transocean, Maersk, Ocean Rig etc.) to locations such as UKNS, Angola, Azerbaijan, Malaysia etc. At present, we charge our day rate and where WHT is applicable (where to do so and applicable rates dictated by the client) and the day rate is grossed-up prior to invoicing so that after WHT has been deducted, we are left with the initial day rate in its entirety. Each job is quoted and invoiced individually. We believe that most of our competitors and similar service suppliers also take this approach.We are in negotiations with one contractor to sign a three-year contract covering all their semis and drillships and we offered a slightly lower than normal day rate in order to secure the work so the profit margins are therefore quite tight.The contractor has come back to us and have asked us to include the WHT in our day rate. I replied to them that I didn't feel that this was workable as there are numerous variables such as DTTs, their invoicing approach etc. and that it was fairer to just charge the actual WHT on a country by country basis, and that I need some input from them as well. I sent my initial findings (attached) to them to highlight my queries and our current approach to WHT as the lady I was dealing with wasn't familiar with WHT. She did get someone more familiar with WHT onboard and that person is going to get back to me with any specifics that she can source (invoicing through Singapore to avoid WHT in Egypt etc). In the meantime, I need to sort out SBS' position. Please note that we do not have any foreign offices/establishments.My questions are:* Do you have any thoughts/experience on whether grossing-up or absorbing the WHT is standard practice, preferable etc.?
* Can you give me a WHT applicable to SBS for each country in the document and also Aruba please?
* If we were to continue to gross-up the day rates, do you have any specific advice or thoughts?
* If we were to go down the line of absorbing the WHT and then off-setting it against our UK CT, in which of the countries could we do this? What could we do with the other countries?
* If were to take the second approach, how much would the appropriate paperwork cost annually in order to offset the foreign tax paid against UK CT?In short, I really need advice on how I can best preserve our margins so that we are left with as close to our initial day rate as possible? This particular contractor, to be honest, are not providing much assistance, they are just trying to minimise their costs at our expense. Most other clients are very helpful on such matters and work with us to minimise the WHT.
Expert:  Nicola-mod replied 1 year ago.
Hello,
I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.
I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.
Thank you!
Nicola
Customer: replied 1 year ago.
I'll continue waiting please, any advice appreciated.
Thanks,
Louise
Expert:  Nicola-mod replied 1 year ago.
Hello,
We will continue to look for a Professional to assist you.
Thank you for your patience,
Nicola
Expert:  bigduckontax replied 1 year ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

If the UK has a Double Taxation Treaty with the country in which your organisation operates then the WHT is allowed as a tax credit against the UK's CT liability. The following countries have a Treaty or convention with the UK:

https://www.gov.uk/government/collections/tax-treaties

I rather think this covers the nub of your question.

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3825
Experience: FCCA FCMA CGMA ACIS
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 1 year ago.

Thank you for your support.

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