Withholding tax on dividends paid to foreign persons

Many foreign investors use U.S. corporations to do business or invest in the U.S. and they should be aware of U.S. tax rules that may apply to the payment of dividends. Under these rules, you are required to withhold federal income tax at a 30% (or lower treaty rate) on dividends paid to foreign shareholders. Before you withhold on distributions to foreign persons or their intermediaries you must receive proper documentation from these persons.