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Can someone clarify this concept for me? Below is my current situation and knowledge of the topic.
My company is located in the US and bills many other countries. Apparently many foreign countries withhold revenue generated from royalties, which is mostly what we bill for (licensing fees and maintenance fees). As of now we write-off the withholding as soon as the payment is received (we assume the difference between the invoice amount and payment receipt is withheld). Different countries charge different rates for different things, which is often hard to determine. We only have a rough table of countries' different withholding rates which is "to the best of our knowledge", and isn't very reliable at all. The actual withholdings often differ from what's on this table, and with what's posted online.
My job is to make sure that we have certificates for all of the foreign tax withholding. I've been told different things about the purpose of obtaining a certificate. Does obtaining a certificate produce a tax credit for my company. Do we get back some percentage of the withholding? If so, how / when is that credit accounted for? Or are certificates simply for documentation purposes? Also, do certificates cost money?
I've been tasked with cleaning up this system and implementing a better process. I am looking to get more accurate information on how much each country is supposed to withhold versus how much they actually do. Additionally, I am interested in delving into how different companies interpret our billings in terms of their withholding policies, and figure out when/how much to withhold. As I look through our records, it seems that many companies are extremely inconsistent. Some payments are received in full while others appear to be withheld at varying rates.
I'm an intern and am just looking to gain some more insight on this issue. If anyone has any suggestions or knowledge they would like to share regarding my situation, it would be much appreciated.
Thanks.
My company is located in the US and bills many other countries. Apparently many foreign countries withhold revenue generated from royalties, which is mostly what we bill for (licensing fees and maintenance fees). As of now we write-off the withholding as soon as the payment is received (we assume the difference between the invoice amount and payment receipt is withheld). Different countries charge different rates for different things, which is often hard to determine. We only have a rough table of countries' different withholding rates which is "to the best of our knowledge", and isn't very reliable at all. The actual withholdings often differ from what's on this table, and with what's posted online.
My job is to make sure that we have certificates for all of the foreign tax withholding. I've been told different things about the purpose of obtaining a certificate. Does obtaining a certificate produce a tax credit for my company. Do we get back some percentage of the withholding? If so, how / when is that credit accounted for? Or are certificates simply for documentation purposes? Also, do certificates cost money?
I've been tasked with cleaning up this system and implementing a better process. I am looking to get more accurate information on how much each country is supposed to withhold versus how much they actually do. Additionally, I am interested in delving into how different companies interpret our billings in terms of their withholding policies, and figure out when/how much to withhold. As I look through our records, it seems that many companies are extremely inconsistent. Some payments are received in full while others appear to be withheld at varying rates.
I'm an intern and am just looking to gain some more insight on this issue. If anyone has any suggestions or knowledge they would like to share regarding my situation, it would be much appreciated.
Thanks.