withholding tax

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Withholding tax

A tax levied by a country of source on income paid, usually on dividends remitted to the home country of the firm operating in a foreign country.

Payroll Tax

A tax in which an employer retains a certain percentage of an employee's wages or salary and gives it to the IRS or tax agency instead of the employee. This reduces or eliminates the possibility that the employee will spend his/her tax liability, and give the government cash flow to fund certain operations. See also: Withholding.

withholding tax

TAX deducted at source from INTEREST or DIVIDEND payments. Withholding taxes are often levied by a country upon interest and dividends paid by a domestic company to non-residents. It is a means of taxing cash flows from the company before such monies move out of their jurisdiction. Such taxes are levied in order to encourage investment at home and raise money for the government. Looked at more broadly from an international community perspective witholding taxes are harmful because they reduce the free flow of international investment and distort the geographical location of such investment. See DOUBLE TAXATION.

withholding tax

a TAX levied by a government on the income (profits, interest, etc.) earned on a foreign portfolio or direct investment by its citizens and companies. Such a tax is levied in order to encourage investment at home and to raise money for the government. Looked at more broadly from an international community perspective, a withholding tax is harmful because it reduces the free flow of international investment and distorts the geographical location of such investment. The EUROPEAN UNION is currently considering introducing a withholding tax, which the UK, as an important centre for the EUROBOND market and a substantial recipient of FOREIGN INVESTMENT, is opposing because of the adverse effect this will have on capital inflows.
References in periodicals archive ?
After December 2012, the business and industrial community was also penalized with a series of controversial SROs introducing large scale changes in taxation structures and enhancing the rates of Sales Tax, With-Holding Tax.
It would help promote the construction industry and the associated industries-the duty on tyre and scrap has been cut to half at 10 percent from 20 percent-the limit of with-holding tax on withdrawal of cash from a bank has been doubled to Rs 50,000 from Rs 25,000-- the Export Development Fund has been enhanced to Rs ten billion.
May be the import prices will decrease after increase of with-holding tax from 2 to 4%.
In its proposals for national budget 2012-2013 sent to FBR, the premier chamber of Pakistan said that high rates of Customs Duty, Sales Tax and With-Holding Tax on import of raw materials, intermediate and finished goods must be brought down to curb smuggling and illegal imports under the guise of Afghan Transit Trade.
iii) Contractors/sub-contractors for designing, supply of plant and equipment and construction of power project will be subject to with-holding tax [at] 4% of gross receipts which will be the final discharge of income tax holiday.