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India enforces withholding tax also on payments between companies and not just from companies to individuals, under the Tax Deducted at Source (TDS) system. (Since April 2016, the United Kingdom has discontinued withholding tax on interest and dividends, though in some cases this income will become liable for taxation through other means). [8]
The EU withholding tax is levied only on individuals and not on companies, discretionary trusts, foundations, stiftungs, anstalts, investment funds, etc., except in very special circumstances, e.g. a "bare trust". The EU withholding tax is not deducted from individuals who reside outside the European Union.
The European Union Savings Directive (EUSD), formally Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments, was a directive of the European Union enacted to implement the European Union withholding tax, requiring member states to provide other member states with information on interest paid to achieve effective taxation of the payments in ...
The tax rates displayed are marginal and do not account for deductions, exemptions or rebates. The effective rate is usually lower than the marginal rate. The tax rates given for federations (such as the United States and Canada) are averages and vary depending on the state or province. Territories that have different rates to their respective ...
Withholding taxes on interest grants the source country its share in tax revenue. As tax interest payments to lenders are lowered on an after tax basis, withholding taxes are not attractive from the perspective of a company. Therefore, in countries with higher withholding tax rates lenders demand higher before tax interest rates from debtors.
Assume that Carpet Ltd is a UK resident company publicly-traded company which buys and sells carpets through offices in UK and Germany. Carpet Ltd's tax rate in the UK is 33% on its business net income of £1 million. Carpet Ltd is also subject to tax in Germany on the equivalent of £100,000 at a tax rate of 37%, or £37,000.
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Many tax systems tax individuals in one manner and entities that are not considered fiscally transparent in another. The differences may be as simple as differences in tax rates, [178] and are often motivated by concerns unique to either individuals or corporations. For example, many systems allow taxable income of an individual to be reduced ...