Prakas No.599 SHV.BrK ,issued on 15 July 2009 on Enterprise expenses subject to withholding tax are allowed for deduction clarify that if a payment that is subject to withholding tax is made, to either resident or non-resident taxpayers and the withholding tax is withheld before a payment is made, then the withholding tax is considered to be an expense of the payer and consequently will be a deductible expense of Profit tax for the payer.

However, if withholding tax is not withheld before the payment is made; the withholding tax will be a non-deductible expense of Profit tax for the payer.

The Prakas also includes Fringe Benefits. in the case that the expenses have been grossed up for tax payment purpose or the payment paid by an employer in relation to benefits provided to its employees, the expense is a nondeductible expense.

PK No. 599 dd 15 Jul 09 on Enterprise_s Expenses subject to withholding tax, allowed for deduction (Kh)