Non-U.S. Software Company, U.S. Customer, and Withholding Tax

I received an email via Hackernews and figured I would answer it here, because this is a common question. This is likely to be the first of many discussions of this topic. For what it is worth, my username on HN is philiphodgen.

Question

Lightly edited (and ignoring the “how much would it cost to hire you?” question), here is what X.Y. (not his real initials, of course) on HN asked:

I am a $COUNTRY resident running a Hong Kong based software business, and a US based client tells me he needs to withhold 30% foreign taxes on the payments made to my company. I am sure this is not the first time you have seen this, and I wonder what’s the typical procedure in this case. (There are no mentions of taxes in our contract, it is first time both parties have engaged in this type of transaction.)

Simplicity

“Simplicity is hard work. But, there’s a huge payoff. The person who has a genuinely simpler system – a system made out of genuinely simple parts, is going to be able to affect the greatest change with the least work. He’s going to kick your ass. He’s gonna spend more time simplifying things up front […]

International Tax Planning Comes Third

Tax planning across borders is complicated.  A massive public company has the budget to deal with complex international tax problems.  Privately-held businesses must deal with the same tax rules that Apple, Google, and Ford face.  But they don’t have the budget to deal with the legal and accounting costs that those highly complex rules will […]

Apple, $82 Billion of Cash, and Tax Policy

Via Glenn Reynolds I was pointed to a TUAW article that referenced a SeekingAlpha article about Apple, its mythical mountain of cash, and the Law of Unintended Consequences.  (That, by the way, is a demonstration of the fabulosity of the interwebs.  Hyperlinks and attributions back to the source.  The internet is just one person talking […]