Withholding Taxnoun · abbr.

Withholding tax requires the payer to deduct a set percentage from certain payments — professional fees, rent, royalties, some contract work — and remit it to the revenue authority, giving the payee a certificate for the amount withheld.

The liability for getting it right sits with the payer, not the supplier. Failing to withhold usually means paying the tax yourself plus penalties, long after the supplier has been paid in full.