A withholding tax is an amount of money that is taken in advance from someone's income, in order to pay some of the tax they will owe.
[mainly US, business]
withholding tax in British English
noun
1.
tax deducted at source from income, esp from dividends, paid to nonresidents of a country, which may be reclaimed if a double-taxation agreement exists between the country in which the income is paid and the country of residence of the recipient
2. US
a portion of an employee's tax liability paid directly to the government by the employer
withholding tax in American English
US
the amount of income tax withheld, as payment in advance, from employees' wages or salaries