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Withholding tax is defined in Section 43 of the Income Tax Act. The taxpayer (a natural person or legal entity) must collect the tax and pay the beneficiary the benefit less the withholding tax. There are three withholding tax rates - 7%, 19% and 35% depending on the income type. The highest tax rate of 35% applies to income paid to the taxpayer of a non-contracting state (or where the payer cannot document the ultimate beneficiary).