How can I avoid this double taxation - Ghana and the United States?

Question

Customer is in Ghana. They bought advertsing space for $6,500. They with held almost $1,000 stating that according to Ghana's IRS tax rate law any payment for goods and services to non residents with out permanent residence is subject to 15% withholding tax.

The $6,500 has already been taxed by Ghana. When the $5,500 received is reported to the United Stated IRS it will be taxed as well. How do we prevent the double taxation?

I found that there is no tax treay between Ghana and the United States. As of date they only have agreements with France and the UK.

Answer 1

Do you have a corporate office in Ghana????? Did you export this display from US?????

From information above seem like you have no way out of this, you will have to pay taxes in US.

Update:

There is no way out of this you will have to pay taxes on $5500 that you have received.

May be go back to your customer and tell them that you had no idea about the 15% withholding tax of Ghana and such expect $6500 in payments, your customer might understand this and pay the additional money from their own pocket (they might not agree but nothing wrong in asking)

Answer 2

I'm a little confused about who is paying whom.  I think your customer is too.

Where is this advertising space?  In a US magazine?  On a US computer?  Does the US entity have ANY presence in Ghana?

Countries source income by WHERE the work is done and by WHOM is doing it.  If this is not Ghana-source income, it should not be subject to tax by Ghana.  If the payee is not a Ghana-entity and has zero Ghana-source income, it should not be subject to Ghana taxes.

Unfortunately, now that the money has been withheld, you probably have to figure out how to file a GHANA tax return (showing $0 income) to request a refund.  If you can get a refund, the US tax system won't give you a credit or deduction for it.