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A withholding tax is a type of tax that is deducted at the source from payments made to an individual or entity. This means that the payer is responsible for subtracting the tax amount from the payment—such as wages, dividends, or interest—before the recipient actually receives the amount. This system is commonly used to ensure that taxes are collected efficiently and in a timely manner, as it allows for immediate collection rather than relying on the taxpayer to pay the full amount at a later date.

By implementing withholding taxes, governments can reduce the risk of tax evasion, as the tax is collected before the recipient has the opportunity to use the funds. It also simplifies the tax payment process for individuals and businesses by distributing the tax obligation throughout the year. This method is particularly seen in the context of employment, where employers withhold taxes from employees’ paychecks.

The other options refer to different types of taxes that do not align with the concept of a withholding tax. Taxes on imported goods, property sales, and taxes that are imposed later on income all involve different mechanisms and purposes separate from the immediate deduction of taxes during the payment process.