Withholding tax is a form of deduction of tax at source charged on payments as opposed to profits. It is not a distinct type of tax but a mechanism of payment of income and profit taxes. It is basically payment of tax in advance such that the tax is deducted from payment by the payer on behalf of the recipient of the payment and remitted to the relevant tax authority with the latter generally still liable for the remaining of the payable income tax, if any. The aim is to aid tax administration, pre-empt tax evasion [1] and enable the government to commence execution of programs for the fiscal year early enough instead of waiting for the end of the fiscal year when taxes are normally filed.
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