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English definition of “withholding tax”

withholding tax

noun [C or U]     FINANCE, TAX
a percentage of the money earned from an investment that is kept by a financial organization to pay directly to the government in tax : EU/Spanish/US withholding tax Britain remains opposed to an EU-wide withholding tax on cross-border savings .withholding tax on dividends/interest payments/savings Many Swiss bank account holders use Jersey to avoid the withholding tax levied on Swiss corporate dividends .
in the US, a percentage of an employee's income that an employer keeps to pay directly to the government in tax : Individuals paying too much withholding tax will receive a tax refund in May.
(Definition of withholding tax noun from the Cambridge Business English Dictionary © Cambridge University Press)
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