Our company do business of manufacture metal and plastic, which almost materials are imported from overseas such as plastic resin is imported from overseas. For this month, the imported plastic resin has problem which it has been stuck for long time in machinery due to its low quality , so we cannot produce the goods to customer follow the timeline. However, this supplier will take responsibility on compensation as we requested in amount of USD 150,000. This compensation money should be submitted with VAT and corporate income tax or not?
Panwa: No, due to the compensation money is not a remuneration from sale / service, so it isn’t subjected to pay VAT (company don’t have the privilege to issue tax invoice to collect money from this case), but such compensation should be recognized as taxable income for income tax calculation.