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Submission of US Tax Form (W9 or W8)

We are in Hotel business located in India and a tax resident in India. Any service rendered to guests would be performed in India.

One of the US company has agreed to hold conference in India with its Indian partners. As per contract they are supposed to make a deposit (as advance) to confirm the booking. The Guest Company (US) wants us (Indian Co) to submit W9/ W8 to process the payment.

In my understanding the payment - as advance, is towards the services which would be rendered in India for stay of US persons in India and there is no business connection of the Indian Co in US through a PE or otherwise. Accordingly no withholding tax obligation is necessary for the Indian Co to be complied with under India-US tax treaty. Indian co do not have any TIN or social security no in US.

I seek your advice on whether any compliance (Forms W8, W9 etc ) is at all required. Any other document is required to enable the conclusion of the contract.

Answers

Andy Vance
Title: Editor
Company: TaxExplorer.Club, LLC
(Editor, TaxExplorer.Club, LLC) |

Form W-9 is a request for a US employer identification number. W-9 would not be appropriate if the Indian company did not have a US employer identification number, and is not operating in the US through a PE or otherwise.

It would however be appropriate for the US Company to request a Form W-8BEN-E. This form is used to establish the foreign status of the Indian company. If the foreign status is documented, the US company is not required to withhold on any payments.

Certain foreign entities are subject to US withholding if they received payments of income derived from the US (referred to as Chapter 3 status), and some are subject to US withholding because they have status as a US person, or because they are a foreign financial institution subject to the FATCA rules (referred to as Chapter 4 status). Form W-8BEN-E also documents whether a foreign entity has Chapter 3 or 4 status thus requiring withholding.

The Form W-8BEN-E instructions can be found here:

https://www.irs.gov/pub/irs-pdf/iw8bene.pdf

They are somewhat understandable despite the complexity of the US rules on withholding on foreign payments.
(Note that Form W-8BEN-E is for entities and a separate form W-8BEN is for foreign individuals.)

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