Okuzeka
Accounting & Tax vocabulary · Income & Corporate Tax

Withholding tax

Meaning in accounting & tax, with examples

nounCommon term

In accounting & tax, withholding tax means: Tax that the payer deducts from a payment, such as a salary, rent, dividend or freelance fee, and pays to the tax authority on behalf of the person being paid.

In Turkish: stopaj, tevkifat, kaynakta kesilen vergi

How it is used

Employers and companies withhold tax and pay it over to the tax office. Cross-border dividends, interest and royalties are often subject to withholding tax, which tax treaties may reduce.

Example sentences

  1. We pay the office rent net of withholding tax and declare the tax in the monthly return.

  2. The dividend paid to our German parent was subject to withholding tax.

Common collocations

  • withhold tax
  • subject to withholding tax
  • withholding tax rate
  • withholding tax certificate
  • income taxA tax on the income of individuals, such as salaries, rent, business profits and investment income, usually charged at rates that rise as income rises.
  • payrollThe process of calculating and paying employees' wages, including tax and social security deductions, and also the total amount a company pays its staff.
  • dividendA part of a company's profit that is paid out to its shareholders, usually in cash and in proportion to the shares they own.
  • tax returnAn official form a taxpayer submits to the tax authority, reporting income, expenses or sales for a period and calculating the tax due.
  • gross payAn employee's total earnings for a period before income tax, social security and other deductions are taken off.

More terms: Income & Corporate Tax

Practise with graded reading

Reading at the right level is the fastest way to make new words stick. Pick free English books by level:

This page explains English vocabulary for learners. It is not financial advice.