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A query was raised regarding whether a company should deduct the repayment of an undue unemployment benefit when calculating withholdings for settlement wages. The Directorate General for Taxes (DGT) ruled that withholding must be applied to the full gross amount of said wages.
Companies must ensure that income tax withholdings on settlement payments are calculated based on the total gross amount, without offsetting any amounts owed by the employee due to previous unemployment benefit errors.
The tax team reviews your specific situation.
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