In the realm of finance, it is important to understand the concept of withholding tax. This refers to a tax on income that is collected at the source, meaning a third party is responsible for deducting and remitting the tax to the government. This method is commonly used for various types of payments such as dividends, interest, and royalties. It is worth noting that the rates of withholding tax can often be lowered through tax treaties. This is a crucial aspect to consider when navigating the complexities of tax systems.
