Commercial
Withholding tax
Tax a buyer may be required to deduct from a cross-border invoice.
Definition
A deduction some jurisdictions require the payer to take from payments to a foreign supplier and remit to their own tax authority. Whether it applies, and at what rate, depends on the two countries involved and on any double-taxation treaty between them.
Why it matters
It is a contract question, not an accounting afterthought. If the agreement is silent, the parties will disagree about whether the quoted price was gross or net of withholding, and one of them absorbs the difference on every invoice. Settle who bears it, and who supplies the tax residency certificate, before signing.
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