My company (a small IT Firm) has a running contract with a Servicing company for support services.
Anytime i send in my Invoice for payment for services, i usually add VAT of 5% to the total amount on the invoice. But they will pay me less the VAT and also minus withholding TAX from the Sub Total.

So in essense, they pay me less VAT and Less with holding Tax.

Is this the right thing thing. What am i supposed to do about this.

Your responses will be highly appreciated. Also other related issues with regards to running a small coy like mine can be included.

Thanks

How much do they charge as withholding tax.I mean the rate.

They are charging with holding tax at 10%

I think that is the updated rate for WHT and VAT keep an eye out for TAX collectors AKA FIRS or they will get you

@realvenc.The right thing is to pay u with VAT included on your invoice.It is wrong to pay you less VAT.But always write your VAT registration no. on your invoices.The 10% WHT is correct for Companies while it is 5% for individual,but ensure that you collect Withholding Tax Credit Note from your client.This is issued by Inland revenue.

walab:

@realvenc.The right thing is to pay u with VAT included on your invoice.It is wrong to pay you less VAT.But always write your VAT registration no. on your invoices.The 10% WHT is correct for Companies while it is 5% for individual,but ensure that you collect Withholding Tax Credit Note from your client.This is issued by Inland revenue.

@Walab. Thanks for the info

realvenc:

My company (a small IT Firm) has a running contract with a Servicing company for support services.
Anytime i send in my Invoice for payment for services, i usually add VAT of 5% to the total amount on the invoice. But they will pay me less the VAT and also minus withholding TAX from the Sub Total.

So in essense, they pay me less VAT and Less with holding Tax.

Is this the right thing thing. What am i supposed to do about this.

Your responses will be highly appreciated. Also other related issues with regards to running a small coy like mine can be included.

Thanks

maybe the company does not trust you to remit the VAT and the withholding tax to the appropriate authorities so they have decided to do it themselves. its still wrong.

I just want to supplement people's response so far as regard WHT. It is very important to take a cognizance of the relevant agent you are remitting to. if it is a limited company it should be remitted to FIRS otherwise LIRS.