The purpose of a withholding tax on dividend income is to
A) raise the effective as rate of the local host country.
B) provide an incentive for MNEs to pay higher dividends to their parent companies.
C) obtain a minimum tax payment on the incomes of dividend income receipts.
D) encourage MNEs to reposition profits outside of their countries.

Question

Quizplus · Accepted Answer

The purpose of a withholding tax on dividend income is to obtain a minimum tax payment on the incomes of dividend income receipts. The tax is deducted at source by the paying entity and is usually a percentage of the gross payment made to the recipient. The aim is to ensure that tax is paid by foreign investors who receive income from a local host country.

The Purpose of a Withholding Tax on Dividend Income Is