One recurring point in transactions with withholding tax (WHT) requirement is: should the payer (obliged to deduct WHT from relevant payment), bear the payee's WHT burden by paying the gross amount and yet remit the WHT to the Revenue? Usually, the party insisting that his payment be grossed up, such that he collects the same amount as he would have received if there had been no WHT requirement, is the party in “stronger” bargaining position. A ready illustration is the typical Nigerian landlord and tenant situation - tenant is, for demand/supply reasons, the “weak” party, and who is under pressure to “get the deal done.” Grossing-up is also common in lending transactions whilst companies sometimes gross-up compensation by paying personal income taxes on behalf of their expatriate employees/consultants.
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