Withholding Tax

Withholding Tax

Withholding Tax means:
the amount of income tax an employer is required to withhold from an employee's salary when the salary is paid. Tax on income imposed at source, i.e. a third party is charged with the task of deducting the tax from certain kinds of payments and remitting that amount to the government. Withholding taxes are found in practically all tax systems and are widely used in respect of dividends, interest, royalties and similar tax payments. the rates of withholding tax are frequently reduced by tax treaties. The amount withheld is a credit against the income taxes the employee must pay on his or her taxable income for the taxable year.

Witholding Tax Credit in U.S. and other Developed Countries International Tax Meaning

Various kinds of income (such as dividends, interest, royalties) are taxed at source by requiring the payer to deduct tax and account for it to the tax authorities (abroad). the taxpayer recipient is entitled to credit the tax withheld at source against his final tax liabilities determined by (domestic) tax law of the country in which he is resident.

State Income Tax

See Withholding Tax and Withholding Tax.


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