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HMRC internal manual

Double Taxation Relief Manual

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HM Revenue & Customs
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DT: Kiribati and Tuvalu: double taxation agreement, Article 13: Tax credits

(1) Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United Kingdom (which shall not affect the general principle hereof)-

  1. Colonial tax payable under the laws of the Colony and in accordance with this Arrangement, whether directly or by deduction, on profits or income from sources within the Colony shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits or income by reference to which the Colonial tax is computed.

Provided that in the case of a dividend the credit shall only take into account such tax in respect thereof as is additional to any tax payable by the company on the profits out of which the dividend is paid and is ultimately borne by the recipient without reference to any tax so payable.

  1. Where a company which is a resident of the Colony pays a dividend to a company resident in the United Kingdom which controls directly or indirectly at least 10 per cent. of the voting power in the firstmentioned company, the credit shall take into account (in addition to any Colonial tax for which credit may be allowed under (a) of this sub-paragraph) the Colonial tax payable by that first- mentioned company in respect of the profits out of which such dividend is paid.

(1A) For the purposes of sub-paragraph (1) of this Paragraph, the term `Colonial tax payable` shall be deemed to include any amount which would have been payable as Colonial tax for any year but for an exemption or reduction of tax granted for that year or any part thereof under;

  1. Section 10 of the Income Tax Ordinance, 1972, so far as it was in force on, and has not been modified since, the date when this Supplementary Arrangement came into force, or has been modified only in minor respects so as not to affect its general character; and except to the extent that it has the effect of exempting or relieving a source of income for a period in excess of 10 years; or
  2. any other provision which may subsequently be made granting exemption or reduction of tax which is agreed by the taxation authorities of the United Kingdom and the Colony to be of a substantially similar character, if it has not been modified thereafter or has been modified only in minor respects so as not to affect its general character.

(2) Subject to the provisions of the law of the Colony regarding the allowance as a credit against Colonial tax of tax payable in a territory outside the Colony (which shall not affect the general principle hereof)-

  1. United Kingdom tax payable under the laws of the United Kingdom and in accordance with this Arrangement, whether directly or by deduction, on profits or income from sources within the United Kingdom shall be allowed as a credit against any Colonial tax computed by reference to the same profits or income by reference to which the United Kingdom tax is computed.

Provided that in the case of a dividend the credit shall only take into account such tax in respect thereof as is additional to any tax payable by the company on the profits out of which the dividend is paid and is ultimately borne by the recipient without reference to any tax so payable.

  1. Where a company which is a resident of the United Kingdom pays a dividend to a company resident in the Colony which controls directly or indirectly at least 10 per cent. of the voting power in the first- mentioned company, the credit shall take into account (in addition to any United Kingdom tax for which credit may be allowed under (a) of this sub-paragraph) the United Kingdom tax payable by that first- mentioned company in respect of the profits out of which such dividend is paid.

(3) For the purposes of this paragraph profits or remuneration for personal (including professional) services performed in one of the territories shall be deemed to be income from sources within that territory, and the services of an individual whose services are wholly or mainly performed in ships or aircraft operated by a resident of one of the territories shall be deemed to be performed in that territory.

(4) Where Colonial tax is payable for a year for which this Arrangement has effect in respect of any income in respect of which United Kingdom income tax is payable for a year prior to the year beginning on the 6th April, 1949, then -

  1. in the case of a person resident in the Colony, the Colonial tax shall, for the purposes of sub-paragraph (2) of this paragraph, be deemed to be reduced by the amount of any relief allowable in respect thereof under the provisions of Section 27 of the United Kingdom Finance Act, 1920; and
  2. in the case of a person resident in the United Kingdom, the provisions of Section 11 (2) of the Gilbert and Ellice Islands Colony Income Tax Ordinance, 1947, shall apply for the purposes of the allowance of relief from the Colonial tax.