A withholding tax

Question

A withholding tax

Quizplus · Accepted Answer

Withholding tax is a way for the tax authority to ensure it receives the tax due on passive income (like interest, dividends, and royalties) from sources within its jurisdiction. It is typically deducted at the source of the income, meaning the payer (not the recipient who earns the income) is responsible for withholding and remitting the tax to the government. This makes option D correct as it combines both the assurance to the tax authority of receiving its due and the burden on the payer, not the direct earner of the income.

A Withholding Tax