### Question
How does the law define high withholding tax interest?


### Answer
Under *26 U.S.C. § 904*, **high withholding tax interest** is defined as:

> any interest if—


(I) such interest is subject to a withholding tax of a foreign country or possession of the United States (or other tax determined on a gross basis), and


(II) the rate of such tax applicable to such interest is at least 5 percent

#### Citation:
  - *26 U.S.C. § 904*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter N-Tax Based on Income From Sources Within or Without the United States > PART III-INCOME FROM SOURCES WITHOUT THE UNITED STATES > Subpart A-Foreign Tax Credit**

