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 ?
Resultantly, the share of withholding tax in total tax collection, which was 56% in June 2013, has now gone up to over 70% in a span of just four and a half years.
The LCCI office-beares hoped that withholding tax on banking transactions will be withdrawn immediately in the larger interest of the industry, trade and economy.
Also with the present policy of withholding tax the size of cash and informal economy may increase while home remittances through banking channels could also be negatively affected to a certain extent.
The government submitted that if withholding tax on dividends is not allowed, the guaranteed IRR by the government of Pakistan to CET will not be 17pc as agreed in the Cooperation Agreement.
withholding agents must generally file tax and information returns with the IRS to report FDAP income paid to foreign payees along with any tax withheld on Form 1042, Annual Withholding Tax Return for U.
Prior to the 2010-2011 budget, the withholding tax was collected along with the monthly electricity bills of commercial and industrial consumers in 12 categories based on the total amount of the bill.
The reason for the implementation of the 3% withholding tax was to help balance the budget with this new revenue source.
Belgium, Luxembourg and Austria will be entitled to drop the withholding tax and set up an automatic information exchange system before the end of the transitional period.
A phone call to the Franchise Tax Board brought a solution to this dilemma: Two forms were required--Form 592, Nonresident Withholding Annual Return, and Form 592-B, Nonresident Withholding Tax Statement.
The New Komeito party insists on moving forward the abolition of the withholding tax option, which is in line with the agreement made by the government's Tax Commission,'' Shiokawa told a meeting of the House of Representatives Financial Affairs Committee.
A subcommittee of the government's Tax Commission unveiled Tuesday a draft proposal that the abolition of a withholding tax on securities transactions be forwarded from April 2003 to an unspecified date.
The amount of the withholding tax is calculated at the highest rate of U.