Withholding Tax
Category: Tax
Definition (plain English)
Withholding tax is tax deducted at source from specified cross-border payments such as royalties, interest, or service fees. Contract gross-up clauses and treaty rates materially change net cost.
Why it matters commercially
Withholding tax can reduce net supplier receipts and create contract disputes if not planned upfront.
Example
A services payment was grossed up after local withholding obligations were confirmed.
Common mistake
Ignoring withholding tax in payment terms and budgeting.
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