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 ?
'Lack of documentation of economic transactions in developing economies is the main contributing factor of low tax base and low revenue collection,' the reply stated adding that in such jurisdictions withholding taxes are the main sources to broaden the tax base to generate revenue.
Howe Institute, (11) have shown a strong link between the elimination of withholding taxes on dividends and interest and increased foreign direct investment.
Another consideration is that in the event of filing Chapter 11, there may be unpaid withholding taxes to state, federal, or local authorities.
He said he hopes to lower the stock transaction tax when the withholding taxes are abolished.
Withholding taxes on stock-trading capital gains, which were originally planned to be abolished at the end of March, will be extended for another two years.
Nobody believes that withholding taxes will be repealed.
In fiscal year 2016-17, the share of withholding taxes in direct tax collection was slightly above 70%.
In a subsequent hearing, the bench had demanded a clarification on whether withholding taxes were being collected as per law.
The Court of Tax Appeals (CTA) has ordered the Commission on Elections (Comelec) to pay the Bureau of Internal Revenue (BIR) P49-million deficiency expanded withholding taxes for taxable year 2008.
* Expeditiously negotiate and implement a new provision in the Income Tax Convention with the United States eliminating withholding taxes on all dividends and interest for payments to both related and unrelated parties.
901(1)(1)'s general rule that denies a foreign tax credit (FTC) for withholding taxes imposed on an item of income (other than dividends) or gain, when the underlying property generating the income or gain is held for a relatively short period.
In Compaq, the Tax Court considered the economic benefit to be the dividend, net of withholding taxes. Second, under the business purpose test, the Eighth Circuit distinguished IES's ADR transactions from Compaq, noting that IES met twice about the transactions and consulted outside accountants and securities counsel for reassurance on the legality of the transactions and their tax consequences.