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client informs they deducted 20% from stated payment
Thread poster: Lucia Fusco

Lucia Fusco  Identity Verified
New Zealand
Local time: 21:00
Italian
+ ...
Feb 15, 2008

I am a UK based translator and I translated for an Indian agency and the amount due was above 800 usd by bank transfer.
I have patiently been waiting for some delay in payment and other administrative problems frome them as the communicaton has always been good.
Today I receive an email saying:

"Hi:

While making out payment, the taxation rules between India and UK state that 20% tax to be deducted from payment.

The tax deduction certificate will also be sent to you.

Regards"


I think this is extremely unfair and unprofessional. I also signed a contract with them where no taxtation was stated, and it was clearly stated my word rate.
What should I do? I already replied explaining my reasons, and also that as I will pay my taxes once I make my yearly income statement I don't see why I have to see a further 20% deduction on my rates and saying that I hope they understand...but I am very worried.
Any suggestion would be apreciated!
Thank you!


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Paul Adie  Identity Verified
United Kingdom
Spanish to English
+ ...
Difficult one Feb 15, 2008

I don't have any experience with Indian translation agencies as they usually suggest rates that are far too low for people living in western Europe. Neither do I know anything about your legal standing, but it sounds like you might just have to grin and bear this one, and take care when dealing with future clients based in far-off places.

I hope this isn't the case, and wish you all the best in getting what you're actually owed!

Best,

Paul


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Jan Willem van Dormolen  Identity Verified
Netherlands
Local time: 11:00
English to Dutch
+ ...
Try to find out Feb 15, 2008

Try to find out what the 'taxation rules between India and the UK' really are. I don't know what sources you would have to consult (the Indian ambassy? The UK tax office?).
But you should try and find out, because the agency might be wrong. I'm not saying they're cheating you, they could simply be in error. Taxation rules are often extremely complicated, and mistakes/misinterpretations are not uncommon.


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Ritu Bhanot  Identity Verified
France
Local time: 11:00
Member (2006)
French to Hindi
+ ...
Taxation Rules in India Feb 15, 2008

Well, I don't know exactly the position with regards to other countries but as an Indian working for Indian agencies/ companies, this is a rule that is applied to all payments above a certain amount... And then we get a TDS (Tax deduction at source) certificate with the exact details. Most of my clients give me this certificate after 31st March.

At the same time, I am sure there are rules agains dual taxation and that is what you should actually try to understand. Here's the link to Income Tax Department's website http://www.incometaxindia.gov.in/ You will get a lot of information there.

Or you can contact the British division of Indo-European Business Group: http://eiebg.unblog.fr/

Hope this information will be of some help.

Best regards,

Ritu

P.S.: But I think it shouldn't be applied to your case (i.e. 20% tax deduction at source) because according to dual taxation treaties any Indian who has not lived in India for at least 182 days in any financial year does not pay tax in India i.e. pays tax in the country where he/ she is living for the rest of the time... Of course, I am just guessing because you are not an Indian citizen but somehow I believe that there must be something similar for you...
When I make the above statement, it is a simplification of the rules... of course, there are different clauses etc. and these clauses have to be seen according to one's situation.

[Edited at 2008-02-15 10:40]


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Zamira*****  Identity Verified
Russian Federation
Local time: 12:00
English to Uzbek
+ ...
Sounds fishy to me Feb 15, 2008

Lucia Fusco wrote:

"Hi:

While making out payment, the taxation rules between India and UK state that 20% tax to be deducted from payment.

The tax deduction certificate will also be sent to you.

Regards"

I think this is extremely unfair and unprofessional. I also signed a contract with them where no taxtation was stated, and it was clearly stated my word rate.
What should I do? I already replied explaining my reasons, and also that as I will pay my taxes once I make my yearly income statement I don't see why I have to see a further 20% deduction on my rates and saying that I hope they understand...but I am very worried.
Any suggestion would be apreciated!
Thank you!


Ask THEM to send you a link to that 'rule' (if there is any relevant to your case). In any case these things must be talked through before you start any translation. I would do a BB entry.


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Samuel Murray  Identity Verified
Netherlands
Local time: 11:00
Member (2006)
English to Afrikaans
+ ...
Could be true Feb 15, 2008

Lucia Fusco wrote:
"While making out payment, the taxation rules between India and UK state that 20% tax to be deducted from payment. ... The tax deduction certificate will also be sent to you."


You have to pay tax on your income anyway. And different countries have different arrangements with each other about work done by non-residents and how the taxes are dealt with. I suggest you contact a local bookkeeper.


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Lucia Fusco  Identity Verified
New Zealand
Local time: 21:00
Italian
+ ...
TOPIC STARTER
thank you all Feb 15, 2008

I could understand that they find out this tax issue: but I also think they should state this before starting the project!
Also, I have already agreed a discount on the total amount of translation for a mistake that was not mine but theirs (they reduced the documents to translate ,once I had already translated them...).
I am having big issues with this company and hope they will be soon solved, or obviously will report to BB in order to warn other people (they contacted me by proz...)


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Zamira*****  Identity Verified
Russian Federation
Local time: 12:00
English to Uzbek
+ ...
Charming Feb 15, 2008

Lucia Fusco wrote:
they reduced the documents to translate ,once I had already translated them.


I hope not after they have got the translated parts from you.


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Nikki Graham  Identity Verified
United Kingdom
Local time: 10:00
Member (2003)
Spanish to English
That's bad practice Feb 15, 2008

Zamira wrote:

Lucia Fusco wrote:
they reduced the documents to translate ,once I had already translated them.


I hope not after they have got the translated parts from you.


I have always been paid for translating work I have done even when the client then later cancels the project, for whatever reason (I have been paid the full per word price even if I had not checked the work translated). Not getting paid for work you were asked to do is not acceptable.

Regarding the other issue, I know nothing about companies in India, but I do know you are liable for income tax here in the UK, and it would be very strange to have to pay twice.


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Russell Jones  Identity Verified
United Kingdom
Local time: 10:00
Member (2004)
Italian to English
Dual Taxation Agreements Feb 15, 2008

Hi Lucia

Here are some links to the UK Inland Revenue pages on dual taxation agreements.
Firstly, one on technical fees paid by Indian organisations to UK providers:

http://www.hmrc.gov.uk/manuals/dtmanual/DT9612.htm

I am no tax expert but my quick interpretation is that the Indian client is entitled to charge you tax.
Next, the page on tax relief:

http://www.hmrc.gov.uk/international/dtr-guidance.htm
Select "DTR on Trade Receipts"

My quick interpretation is that you can obtain relief in the UK but limited to the amount of tax you would have paid in the UK.

I hope that's useful.
Best of Luck

Russell


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The Misha
Local time: 05:00
Russian to English
+ ...
Next time think twice about who you accept your jobs from Feb 15, 2008

Unfortunately, it appears that you have absolutely no recourse in the matter. Zilch. Nada. They could have deducted 50%, and you'd have to eat it up too. Next time try to assess your risks realistically before accepting any jobs from those far away runner up places.

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Niraja Nanjundan  Identity Verified
Local time: 14:30
German to English
It's not 20% within India Feb 15, 2008

Hi Lucia,

I work in India and have the same experience as Ritu described with Indian clients.

I got paid by an Indian client today and after reading your forum post, I checked how much tax they had deducted at source: it's 10.3%.

I don't know what the taxation rules between India and the UK are, but 20% seems a lot to me. As others have suggested I would check the regulations.


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ViktoriaG  Identity Verified
Canada
Local time: 05:00
English to French
+ ...
Are you on the payroll in India? Feb 16, 2008

If you are not on their payroll, they can't deduct anything, because they don't pay taxes for your services to either the UK or India. You sold them a service. If they bought a laptop on Ebay from any foreign country, would they also charge 20% to the seller? I doubt it... If anybody in this matter had taxes to pay, it would be them to you, not the opposite, and even that is highly unlikely.

Either they have no experience buying services abroad and made a mistake or they are trying you on. Either way, you are a UK resident and you work in the UK, so you have no taxes to pay abroad. You are not an employee.

[Edited at 2008-02-16 06:58]


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xxxMarc P  Identity Verified
Local time: 11:00
German to English
+ ...
Let me get this right: Feb 16, 2008

Indian residents pay €91.20 for ProZ membership, and issue a certificate to Henry that they've withheld €22.80 in taxes. Is that correct?

Marc


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gruftiam
English to German
Get Paid First Feb 24, 2008

I used to design and manufacture wireless Internet equipment for a living.

I had some very unfortunate dealings with a client in India over Indian taxes/duties due. The contract, which their CEO had signed, specifically said that the client was responsible for all taxes, fees, and duties. Yet they deducted an amount of 15% from my payment for exactly this. when i asked how this was legal, they said the fact that the contract was signed in the USA made it worthless in India. I disagreed, but politely swallowed my pride and shut up, because if that was the case, then the technical support which was included in the contract, I was no longer under obligation to provide. when they came to me for technical support, claiming that it was their right under contract, I pointed out their own declaration that the contract was invalid, and they would have to pay me up front for an hourly consulting fee. They did this, and I gave them support. It would have been cheaper for them to have not made their 15% deduction! When they wanted spare parts, I told them that they had to pay cash up front, which they did, but I have not heard from then since. They are one customer I was not sad to lose.

I have heard of others with similar problems doing business with India. Perhaps there is a gross misunderstanding of the morality and ethics of contracts and business in that country. Perhaps just in Bombay.

Seller beware!


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