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HMRC internal manual

Double Taxation Relief Manual

From
HM Revenue & Customs
Updated
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Kuwait: Underlying Tax

  1. Documents needed to support the underlying tax claim

The accounts showing the profits out of which the dividend has been paid and the notice of assessment showing the final liability to tax will be required by the Underlying Tax Group.

  1. Calculation of the rate

Kuwaiti shareholders in joint venture companies pay little or no tax on the Kuwaiti share of the profits. The Kuwaiti tax on the United Kingdom company’s share of the profits is the liability of the United Kingdom shareholder.

Before the changes to the double taxation rules brought in by FA2000, United Kingdom accepted that the ability to specify profits contained in Section 799(3)(b) ICTA 1988 meant that all of the United Kingdom company’s tax payment could be attributed to its share of the Kuwaiti company’s profits.

For dividends paid into the United Kingdom on or after 31st March 2001 Section 799(3)(b) has been abolished. It is no longer possible therefore for a United Kingdom shareholder to specify that a dividend has been paid out of only a portion of the company’s profits.

However in accordance with past practice we are happy to continue regarding the tax paid by the shareholder as qualifying for underlying tax relief. But for dividends paid into the United Kingdom on or after 31st March 2001 the tax paid by the shareholder must be attributed to the whole of the company’s profits for the year.