Reduced Withholding Tax

More considerations

If a case satisfies more than one of the requirements of for the above strategies, the following additional issues are often taken into consideration:

ITA 25Tax TreatiesExemption for royalties
BenefitReduced 3% withholding rateReduced withholding rate or exemptedExempted
Required time, cost, and effortLowHighHigh
UncertaintyLowHighHigh
Time to apply

-Option 1. Pay regular 20% withholding tax first and apply for a reduced rate later. After obtaining the approval for the reduced rate, then proceed to apply for tax refund.

-Option 2. Apply in advance for the reduced rate and pay by the reduced rate directly.
Both option 1 and 2 are available.Usually only option 1 is available because the application requires the evidence of service provision and cannot be submitted beforehand.Usually only option 1 is available because the application requires the evidence of service provision and cannot be submitted beforehand.
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