Taxation (International and Other Provisions) Act 2010 (c. 8)

Part 2 U.K. Double taxation relief

Modifications etc. (not altering text)

C1 Pt. 2 modified by 1988 c. 1, Sch. 19ABA paras. 26-28 (as inserted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 34(3) (with Sch. 9 paras. 1-9, 22))

C2 Pt. 2 applied by 2010 c. 4, s. 269DL(6) (as inserted (with effect in accordance with Sch. 3 Pt. 3 of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 3 para. 1)

CHAPTER 2 U.K. Double taxation relief by way of credit

Taking account of foreign tax underlying dividends U.K.

58 Calculation if dividend paid by non-resident company to resident company U.K.

(1) A calculation under this section (see section 57(2)(a)) is as follows—

• Step 1 Calculate the amount of the foreign tax borne on the relevant profits by the company paying the dividend.

• Step 2 Calculate how much of that amount is properly attributable to the proportion of the relevant profits represented by the dividend.

• Step 3 Calculate the amount given by—

  

  where—

  D is the amount of the dividend,

  PA is the amount given by the calculation at Step 2, and

  M is the rate of corporation tax applicable to profits of the recipient for the accounting period in which the dividend is received or, if there is more than one such rate, the average rate over the whole of that accounting period.

• Step 4 If under the law of the non-UK territory the dividend has been increased for tax purposes by an amount to be—

  (a)

  set off against the recipient's own tax under that law, or

  (b)

  paid to the recipient so far as it exceeds the recipient's own tax under that law,

  calculate the amount of the increase.

• Step 5 If the amount given by the calculation at Step 2 is less than the amount given by the calculation at Step 3, UT is the amount given by the calculation at Step 2 but reduced by any amount calculated at Step 4.

• Step 6 If the amount given by the calculation at Step 2 is equal to or more than the amount given by the calculation at Step 3, UT is the amount given by the calculation at Step 3 but reduced by any amount calculated at Step 4.

(2) In this section “UT” means the amount of underlying tax to be taken into account as a result of the provision mentioned in section 57(1).