withholding tax

Personal income tax paid on wages, salaries, dividends, or other income received by a non-resident of a country. Withholding tax is deducted at source to ensure that the income does not leave the country without being taxed. For example, dividends paid on US stocks held by a UK resident would be subject to withholding tax. Where countries have reciprocal double-taxation arrangements the tax may be reclaimable; this can be achieved by filling a tax return.