Client Alert: Withholding Tax payment in foreign currency

10
Feb
2016

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The Internal Revenue Department (“IRD”) has issued an update on its previous internal directive, which changed the tax payment procedures, allowing only payment orders (“POs”) from state-owned banks for the payment of taxes.

The IRD has stepped back from this somewhat, as it will now allow POs issued by private banks for withholding tax (“WHT”) payments in foreign currency.

Under the new practice, it is possible to purchase the PO without any draft chalan from the CCTO depending on the requirements of the private banks. Instead, the company should prepare a letter including detailed information of the WHT which includes payment reason, supplier name, WHT amount and the bank account of the CCTO.

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