Withholding tax意思

Withholding tax, also known as retention tax, is a type of income tax that is collected at the source of payment rather than being paid directly by the taxpayer to the government. It is typically applied to certain types of income, such as dividends, interest, royalties, and wages, and is withheld from the payment by the payer before it is paid to the recipient.

The purpose of withholding tax is to ensure that income taxes are paid in a timely manner and to reduce the likelihood of tax avoidance or evasion. In many countries, withholding tax is a common method of collecting income tax, and it is often used in conjunction with other methods, such as self-assessment and audits, to ensure that taxpayers meet their tax obligations.

The rate of withholding tax varies depending on the country and the type of income being paid, and it may be subject to a reduced rate or be exempt under certain tax treaties or agreements. In some cases, the recipient of the income may be entitled to a refund of any withholding tax that has been applied if they can demonstrate that they are not liable for the tax or that the tax has been overpaid.