From The Jolly Contrarian
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| A form of [[tax]] in which the payer of an amount of money (often interest payment or a dividend) is must withhold a portion of that payment and remit it to the tax authorities on the payee's behalf.
| | #redirect[[Withholding tax and gross-up]] |
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| Wherever one finds a [[withholding tax]] — or a risk of one — one will find legal provisions compelling the payer to [[gross up]] the withheld payment (or absolving it from doing so). A [[gross up]] is meant to put the payee in the position it would have been had there been no withholding, so it gets he whole amount it initially expected. Grossing up may mean having to withhold an additional extra bit from the grossed up payment (and having to gross up that too, in an asymptotic slivers ''ad nauseam'')
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| Certain kinds of tax are susceptible to withholding: taxes on interest and dividend payments, for example, as these are neatly determinative and may be clipped a pre-specified rate without any pause for thought. Other taxes are less suitable for withholding: General income tax obligations, the net levels of which depend on one's whole income over a year, for example. These can’t realistically be claimed by withholding, but that won’t stop tax attorneys [[For the avoidance of doubt|avoiding non-existent doubts]] about the risk that some revenue authority, somewhere in the world, contrives some way of doing it.
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| {{Seealso}}
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| *[[gross-up]]
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| Indemnifiable tax
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Latest revision as of 14:31, 5 December 2023