withholding tax

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July 15, 2026

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Withholding tax is a deduction taken at the source of income, such as from wages or dividends, as an advance payment towards an individual's income tax liability. This practice is common in most countries that levy income taxes.12

The administration of tax laws, including the collection of taxes, is the responsibility of the executive branch of government. While taxpayers often establish their own income tax liability, tax administrations are responsible for the final computation of taxes on income, inherited property, or property transfers. In some cases, the amount withheld may fully satisfy the taxpayer's obligation, eliminating the need to file a tax return. Changes in tax laws or credits can sometimes lead to over-withholding, resulting in tax refunds when individuals file their returns.23

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tax law
Computation of the tax
…provide for prepayment of the withholding tax on dividends and other income from personal property and have set up a “pay-as-you-go” system for professional income. Such provisional payments are calculated by the taxpayer. Advance payment of all or part of the income tax (on a voluntary or compulsory basis) before…
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…provide for prepayment of the withholding tax on dividends and other income from personal property and have set up a “pay-as-you-go” system for professional income. Such provisional payments are calculated by the taxpayer. Advance payment of all or part of the income tax (on a voluntary or compulsory basis) before…
Read More

income tax
Ease of administration
…easier by the practice of withholding (retaining) the tax from wage and salary payments. The same approach has not been extended to interest and dividends in the United States, although it has in other countries. Compliance is undoubtedly incomplete, and complex provisions increase costs for both taxpayers and the fiscal…
Read More
…easier by the practice of withholding (retaining) the tax from wage and salary payments. The same approach has not been extended to interest and dividends in the United States, although it has in other countries. Compliance is undoubtedly incomplete, and complex provisions increase costs for both taxpayers and the fiscal…
Read More