What is withholding tax and its proposed application in the UAE

What is withholding tax and its proposed application in the UAE

Usually, WHT applies to cross-border payments as well. WHT rates vary based on the nature of goods and services received and the relationship status with the non-resident supplier

The amount of withholding tax is paid directly to the government by the party that deducts the tax at source.

By Mahar Afzal/Compliance Corner Published: Sun 20 Nov 2022, 3:34 PM

The term ‘withholding tax’ refers to the tax withheld at source. In some jurisdictions, this is called pay-as-you-go. In the withholding tax (WHT), the party paying the amount against the goods and services withholds the tax at the source at the pre-given rates and pays the remaining amount to the party providing the goods and services. The amount of withholding tax is paid directly to the government by the party that deducts the tax at source. Like the jurisdictions where the personal income tax is applicable, tax is deducted at source by the employer on salary, and the employer pays the tax directly to the government.

Usually, WHT applies to cross-border payments as well. Moreover, WHT rates vary based on the nature of goods and services received and the relationship status with the nonresident supplier. Like in Saudi Arabia, while making payments to non-resident unrelated