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HMRC internal manual

Double Taxation Relief Manual

HM Revenue & Customs
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Double Taxation Relief Manual: Guidance by country: Qatar: Underlying Tax

(1) Documents needed to support the underlying tax claim

The accounts showing the profits out of which the dividend was paid and a copy of the final tax declaration or notice of assessment will be required by the Underlying Tax Group.

(2) Calculation of the rate

Qatari shareholders in joint venture companies there pay little or no tax on the Qatari share of the profits. The Qatari 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, HMRC 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 Qatari 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 HMRC will 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.