Withholding Tax (Cross-Border)
Definition
Tax withheld in the source country on cross-border payments such as dividends, interest and royalties. Double taxation treaties often reduce the rate, and relief or credit may be available in the recipient's country.
Related Terms in International Tax
Double Taxation Avoidance Agreement (DTAA)
A treaty between two countries that prevents the same income being taxed twice, by assigning taxing rights and providing credits or exemptions. It is central to cross-border tax planning and compliance.
Transfer Pricing
The rules governing the prices charged between related entities across borders, requiring them to reflect what independent parties would agree (the arm's-length principle), so profit is not shifted artificially to low-tax jurisdictions.
Permanent Establishment
A fixed place of business, or a dependent agent, through which a foreign enterprise carries on business in a country, generally creating a taxable presence there under tax treaties.
VAT
Value Added Tax, a consumption tax charged at each stage of supply where businesses collect tax on sales and reclaim tax on purchases, so the net burden falls on the final consumer. Used across the UK, the EU, the Gulf and much of the world; India and Canada run GST variants of the same mechanism.
Stop memorising terms — let HelloBooks do the work
AI-assisted bookkeeping that handles invoicing, GST, reconciliations, and reports automatically. Free to start.