Withholding Tax
Tax deducted at source from payments like dividends, interest, or wages.
Withholding tax is income tax that is deducted at the source of payment rather than being paid directly by the recipient. Employers withhold tax from employee wages, and companies withhold tax from dividend or interest payments to foreign investors. Withholding tax rates on cross-border payments can often be reduced through tax treaties. Common withholding taxes include those on dividends (typically 15-30%), interest, and royalties.