An Omani establishment has received an invoice of OMR 15,000 on account of a foreign sub-contractor. As per the agreement, the sub-contractor should be paid exactly the invoice amo... An Omani establishment has received an invoice of OMR 15,000 on account of a foreign sub-contractor. As per the agreement, the sub-contractor should be paid exactly the invoice amount. The WHT rate is 10%. Determine the total amount the Omani establishment needs to pay and the amount of WHT.

Understand the Problem

The question asks to calculate the total amount to be paid by an Omani establishment to a foreign sub-contractor, considering a Withholding Tax (WHT) of 10% on an invoice of OMR 15,000. This involves determining the amount of WHT to be deducted and the gross amount the Omani establishment needs to pay to cover both the invoice amount and the WHT.

Answer

OMR 16,500

Steps to Solve

Calculate the Withholding Tax (WHT) amount.

To find the withholding tax amount, multiply the invoice amount by the WHT rate. $$ \text{WHT} = \text{Invoice Amount} \times \text{WHT Rate} $$ $$ \text{WHT} = 15,000 \times 0.10 = 1,500 $$

Calculate the gross amount to be paid.

The gross amount is the sum of the invoice amount and the WHT amount. $$ \text{Gross Amount} = \text{Invoice Amount} + \text{WHT} $$ $$ \text{Gross Amount} = 15,000 + 1,500 = 16,500 $$

The total amount to be paid by the Omani establishment is OMR 16,500.

More Information

Withholding tax is a tax on income that is withheld by the payer and remitted to the government on behalf of the recipient. It is a common practice in many countries to ensure tax compliance.

Tips

A common mistake is to only consider the invoice amount without including the withholding tax when calculating the gross amount to be paid by the Omani establishment. Another mistake is to calculate the withholding tax incorrectly, or apply it in the wrong direction.

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