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A query was raised regarding whether the minimum withholding tax rate of 2 per cent can continue to apply after a six-month employment contract is extended for a further six months. The Directorate-General for Tax (DGT) ruled that the extension necessitates an adjustment of the withholding tax rate, although the 2 per cent minimum rate remains applicable provided the extension itself is for a period of less than one year.
Employers must review and adjust the withholding tax rates for employees whose fixed-term contracts are extended, ensuring compliance with tax regulations based on the total duration of the employment relationship.
The tax team reviews your specific situation.
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