Definitions #
A tax that is taken out of a payment before the recipient gets it, usually on cross-border interest, dividends, or royalties.
Technical A tax levied at source on payments made to non-residents, typically on dividends, interest, or royalties, often reduced by an applicable tax treaty.
Example The US payer must deduct 30% withholding tax from the gross amount of the royalty paid to the non-resident licensor.
Etymology #
Withholding (keeping back) + tax; the concept dates to the early 20th century when governments began requiring payers to deduct tax at source.
Collocations #
- WHT rate 预提税率，通常指法定税率或条约优惠税率
- treaty relief 税收协定减免，降低预提税税率
- gross-up clause 毛额补足条款，由支付方承担税费，使收款方净得约定金额
Real Business Examples #
- The finance team must confirm the applicable WHT rate on the intercompany loan interest before processing the payment.
- To claim treaty relief on the dividend payment, the beneficial owner must submit a completed Form W-8BEN-E.
Register & Variants #
- Register: formal
- BrE/AmE: 全球通用
Synonyms & Antonyms #
- Synonyms: WHT, deduction at source
Common Errors #
- Assuming WHT is always 30% without checking the treaty Always review the applicable tax treaty to determine the reduced rate or exemption.
- Applying WHT to payments for services without proper classification Service fees may be subject to WHT only if they constitute royalties or fees for technical services; verify local tax law.
Confusable Terms #
- Payroll Tax vs Withholding Tax
- Payroll tax is a tax on wages paid by the employer, not a deduction from cross-border payments.
Frequently Asked Questions
Who is responsible for paying WHT??
The payer (e.g., company) must deduct and remit the tax to the tax authority; the recipient may bear the economic burden.
Can WHT be avoided??
WHT can be reduced or eliminated if an applicable tax treaty provides for lower rates or an exemption, and if the recipient qualifies as the beneficial owner.
What is a gross-up??
A gross-up is a contractual mechanism where the payer pays the additional amount to offset the WHT, leaving the recipient with the agreed net amount.
Published: 2026-09-23 Category: Taxation