Many jurisdictions withhold/deduct tax at source to avoid tax evasion when the recipients of the income are non- residents.
The tax withholding rates relate mainly to payment of dividend, interest and royalties. In certain cases the withholding rates also include payments to non-residents from income of rent, services and capital gains.
Tax withholding rates from payment of dividend may include reduced/zero withholding rate when the recipient is a "significant shareholder "of the paying company. A "significant shareholder " is generally, not always , defined as a shareholder holding at least 25% of the shares.
Under provisions of some tax treaties there are sometimes exemption from tax withholding of interest from central banks or government debentures .
Royalties include, in many cases, a comprehensive definition , yet, in some tax treaties there is a different tax withholding rate for film royalties, copyright royalties, patent or trademark royalties.
The following tax withholding table presents tax withholding rates for payments of dividend, interest and royalties to non-residents.
The tax withholding rates be zero/exempt under tax treaties or the EU directive.
Another aspect of tax withholding relates to domestic tax withholding from salaries. Employers generally deduct tax at source when paying their resident employees according to tax tables in each country. The tax withheld is paid by the employers to the tax office on monthly or bi-monthly basis . Tax withholding from salaries is not included in this tax chart.
Tax Withholding Table
Notes to the tax withholding table:
(1) India - Rates are before surcharge and cess.
(2) Japan – Rates include a 2.1% surtax.
Note: The information is for general guidance only. Users of this site are advised to take professional advice before taking practical tax decisions.
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