Dividend tax

A distribution on shares is called a dividend. The company has to withhold dividend tax and remit it to the tax authorities. Dividend tax is a withholding tax. This means that the taxpayer can subsequently offset the dividend tax against the income tax payable on the distribution or against any corporate tax due on the distribution.

On repayment of share premium, dividend tax may also be due. This can be avoided by first converting the share premium into share capital, by issuing new shares and then stamping them via an amendment to the articles of association. If this is not done, dividend tax and substantial interest tax will be due on redemption.

For more information on dividend tax limitation, please contact us. We will be happy to advise you.