Contractors can choose to pay withholding tax
Inland Revenue are looking to change the way contractors pay withholding tax on their income earnt. As of 1st April 2017 contractors could choose to opt in to the 'pay as you go' voluntary withholding tax directly to the IRD out of their contract income.
Contractors will be able to choose a withholding tax rate that suits, rather than applying to IRD. This is part of the IRD's business transformation programme to make it easier for businesses to deal with tax payments.
This will have benefits to small businesses excluding labour hire firms. You will provide your client with a special elected rate on your invoice. The client then takes your elected withholding tax voluntary payments directly out of your earnings and returns this to IRD on your behalf.
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