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09 October 2023

Features/Characteristics of Withholding Tax

  • It is a deduction at source: which gives the taxpayer no option as to whether to pay or not
  • It is an advance payment on income tax for which credit will be granted at the time the total tax liability is determined.
  • Withholding tax cannot be used to offset any other type of tax except income tax
  • Withholding tax deduction from Frank Investment income is regarded as the final tax.
  • For a non-resident taxpayer, withholding tax is regarded as final tax on dividend, interest, rent, and royalty.
  • Withholding tax credit is first utilized in the year of assessment the income relates; before it can be used to settle future years tax liabilities.

Withholding Tax is deductible from the following sources:

  • Dividends
  • Interest
  • Rent (including hire of equipment and lease)
  • Director’s fees
  • Royalties
  • Consultancy & Professional Services
  • Management Services
  • Technical Services
  • Commissions
  • Building Construction & Related activities
  • Contracts of Supplies (other than sales in the ordinary course of business).

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