CHAPTER XVI. System and Scope of Withholding of Taxes

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1 CHAPTER XVI System and Scope of Withholding of Taxes Country Argentina Salaries and other employment income are subject to withholding of income tax at progressive rates. Fees paid to resident directors are subject, once approved by the Assembly to a 7% withholding tax which is creditable against the final liability of the recipient. Interest income is subject to withholding tax at source, at rates depending upon the item of interest involved. The withholding tax may be credited against the income tax. Royalties, services fees and rents from letting movable or immovable property in excess of a certain sum are subject to withholding of income tax at source. For resident entities dividend is exempt from tax. Net income from Argentine sources paid to non-resident corporations companies, enterprises and individuals is subject to a 36% withholding tax. (This is not applicable to dividends and similar income for which there are special rules). As a rule, the withholding tax must be paid to the Treasury within 5 days from the payment of income. Where Financial institutions serve as intermediaries, they are required to withhold the tax on income remitted abroad if the tax has not previously been withheld by the principal. For non-residents the withholding tax is final. Bangladesh Tax must be deducted at source in the following cases: Residents: - Interest on fixed deposits paid to residents. - Payments for imports or exports, for supply of goods, execution of contracts or services to or with the Govt., local authority or statutory corporations. - Indenting commission. - Travel and shipping agency commissions. - Public auction/sales of goods or property.

2 - Insurance commission. - Rents from house property. Lottery winnings, card games or other games of any sort or from gambling or betting. - Income from export of manpower. - Remuneration of film actors. Non-Residents: - Dividends - Interest on securities - any other income. Tax must be deducted by employers, as per prescribed formulae, from payments of income chargeable under the head 'salaries' whether to residents or non-residents. The taxes deducted at source must be remitted to the Treasury by the person making the deduction, within the prescribed time. A certificate of deduction of tax at source must be given to the person to whom the payment is made by the person responsible for deducting the tax. For non-residents the withholding tax is final. Canada All employers must make source deduction from employment income and retiring allowances paid to the employees. It must be remitted to the Regional Commissioner of Taxes within a prescribed time limit. Dividends, interests, royalties, fees, commission on other amounts to a non-resident for services rendered in Canada are subject to a 25% withholding tax. Withholding tax is final for non-residents.

3 Italy Dividends, interest and royalties are subject to withholding taxes. Withholding taxes on dividends, interest and royalties paid to non-resident companies and to non-residents without a permanent establishment are final. Withholding taxes on prizes and lottery winnings are also final. In addition to the withholding taxes on dividends, interest and royalties, Italian companies must make the following withholdings as advance levy: a. on salaries: at progressive rate, corresponding to individual income tax rates; b. on remuneration to professional people, directors, statutory auditors at 19% (20% if paid to non-residents); c. on agents and brokers commission at 5%. Taxes withheld at source must be paid to the tax collecting agents, by means of direct payments, within the time limits prescribed. Payments may also be made through the appropriate post office current account but at least 6 days prior to the due date. Return must be filed between 1 and 30 April of the following year in respect of all payments made and profits distributed. For certain withholdings applied on interest, prizes and winnings, the return must be filed along with the taxpayer's corporate income tax return. Mexico Payments may be subject to withholding tax at source, especially in the case of non-residents. Income from immovable property paid by legal entities is subject to the withholding tax at source at the rate of 10%. Interest paid to non-residents is subject to withholding tax at different rates. Certain interest payments are exempt from withholding tax. Royalties paid to non-residents are subject to withholding tax on gross receipts at different rates. Fees for professional or technical services are treated as royalties. Fees paid by resident enterprises to non-resident members of a Board of Directors, control, advisory and other bodies are subject to a 30% withholding tax.

4 Income derived by non-residents from Mexican sources is normally subject to a final withholding tax. As a rule withholding taxes are payable within the first 17 days of the month following the period in which the withholding was made. The Netherlands An employer is required to withhold tax from wages (wage tax) of his employees and to pay it over to the receiver of taxes. A withholding tax of 25% is levied on winnings from games of chance, which are exempt from income tax. There ip a withholding tax on dividends paid by resident companies to residents or non-residents, whether in cash or in kind, interest from profit sharing bonds and payments in excess of replacements of capital or when the company is liquidated. The rate is 25% for non-residents. Withholding taxes on payments on accounts of dividends and winnings from games of chance are final. New Zealand From 1 October, 1989 resident withholding tax (RWT) must be deducted from certain payments of interest and dividends - resident withholding income" (RWI) - to New Zealand residents and non-residents carrying on a "taxable activity" through a fixed establishment in New Zealand. From 1 April, 1992, all dividends received by a company are subject to withholding tax of 33%. The tax must be deducted when the interest or dividend is paid and must be accounted for to the Income Tax Department on a monthly basis (by the 14th - or 20th for withholding tax payable on or after 1 July, of the month following the month of deduction). Where it is estimated that such deductions will amount to less than NZ $ 500 in each month, the tax may be accounted for on a six monthly basis. Non-resident withholding tax is imposed on "non-resident withholding income" derived from New Zealand by a non-resident. The "non-resident withholding income consists of dividends, interest, royalties and know-how payments. Film royalties are not subject to this withholding tax. The tax must be deducted at the time of payment and paid to the Income Tax Department on or before the 14th (or 20th for tax payable on or after 1 July, 1992). Non-resident withholding tax is a final tax exemptions). (with certain

5 Norway Employers are required to withhold tax from salaries, etc. according to tax cards issued by the tax authorities to individuals. When no card is presented, the withholding rate is 50%. There is a withholding tax which applies to dividends paid by companies resident in Norway to non-resident shareholders. The withholding tax deducted from dividends must be remitted to the tax authorities together with the withholding on salaries on specified dates. For non-residents the withholding tax is final. The Philippines A creditable withholding tax is imposed on income payments to certain professionals (10 or 5% and contractors (1%) and on rentals (5%). All sales, exchanges or transfers by individuals and corporations of real property are subject to varied rates of creditable withholding tax based on the gross selling price to be withheld by the buyer. Income tax is generally withheld at source by whoever has control over the payment of income to non-resident alien individuals and foreign corporations not engaged in trade or business. Withholding tax must be deducted from employment income in accordance with the rates prescribed in Revenue Regulations. For employment income of aliens, the rate is 15%. Passive income which includes dividends, interest, royalties and prizes, is subject to withholding tax at varying rates. Withholding taxes on dividends, interest on foreign loans, royalties and other income earned by non-residents in the Philippines must be remitted within 25 days from the close of each quarter. The withholding tax is final in the case of passive income. Spain There is no withholding as such in Spain. Tax is withheld on account of final personal or corporate income tax liability. Dividends, interest and royalties paid to residents and non-residents are subject to a 25% tax.

6 Spanish source income derived by companies resident or with an establishment in Spain is subject to withholding of corporate income tax which is credited against the corporate tax liabi lity for the year concerned. Withholding on account of personal income tax is required to be made at source for income derived from personal services. It is determined according to a person's total annual compensation, taking into account his family status.