DT: Kiribati and Tuvalu: double taxation agreement, Article 6: Dividends
a. Dividends paid by a company which is a resident of the United Kingdom to a resident of the Colony may be taxed in the Colony.
b. Where a resident of the Colony is entitled to a tax credit in respect of such a dividend under sub-paragraph (2) of this Paragraph tax may also be charged in the United Kingdom, and according to the laws of the United Kingdom, on the aggregate of the amount or value of that dividend and the amount of that tax credit at a rate not exceeding 15 per cent.
c. Except as aforesaid, dividends paid by a company which is a resident of the United Kingdom to a resident of the Colony who is subject to tax in the Colony on them shall be exempt from any tax in the United Kingdom which is chargeable on dividends.
A resident of the Colony who receives dividends from a company which is a resident of the United Kingdom shall, subject to the provisions of sub-paragraph (3) of this Paragraph and provided he is subject to tax in the Colony on those dividends, be entitled to the tax credit in respect thereof to which an individual resident in the United Kingdom would have been entitled had he received those dividends, and to the payment of any excess of such credit over his liability to United Kingdom tax.
Sub-paragraph (2) of this Paragraph shall not apply where the recipient of the dividend is a company which, either alone or together with one or more associated companies, controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividend. For the purposes of this sub- paragraph two companies shall be deemed to be associated if one is controlled directly or indirectly by the other or both are controlled directly or indirectly by a third company.
4. Dividends paid by a company which is a resident of the Colony to a resident of the United Kingdom who is subject to tax in the United Kingdom in respect thereof shall be exempt from any tax in the Colony which is chargeable on dividends in addition to the tax chargeable in respect of the profits or income of the company.
The term ‘dividends’ as used in this Paragraph means income from shares, or any other item which under the law of the territory of which the company paying the dividend is a resident, is treated as a dividend or distribution of the company.
If the recipient of a dividend is a company which owns 10 per cent or more of the class of shares in respect of which the dividend is paid then sub-paragraphs (1) and (2) or, as the case may be, sub-paragraph (4) of this Paragraph shall not apply to the dividend to the extent that it can have been paid only out of profits which the company paying the dividend earned or other income which it received in a period ending twelve months or more before the relevant date. For the purposes of this sub-paragraph the term `relevant date` means the date on which the beneficial owner of the dividend became the owner of 10 per cent or more of the class of shares in question:
- Provided that this sub-paragraph shall not apply if the beneficial owner of the dividend shows that the shares were acquired for bona fide commercial reasons and not primarily for the purpose of securing the benefit of this Paragraph.
The provisions of sub-paragraphs (1) and (2) or, as the case may be, sub- paragraph (4) of this Paragraph shall not apply where a resident of one of the territories has in the other territory a permanent establishment and the holding by virtue of which the dividends are paid is effectively connected with a business carried on through that permanent establishment. In such a case the provisions of Paragraph 3 shall apply.
Where a company which is a resident of one of the territories derives profits or income from sources within the other territory, the Government of that other territory shall not impose any form of taxation on dividends paid by the company to persons not resident in that other territory, or any tax in the nature of an undistributed profits tax on undistributed profits of the company, by reason of the fact that those dividends or undistributed profits represent, in whole or in part, profits or income so derived.