Definition of “withholding tax” - English Dictionary

“withholding tax” in Business English

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withholding taxnoun [ C or U ]


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” from the Cambridge Business English Dictionary © Cambridge University Press)