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HMRC internal manual

Double Taxation Relief Manual

From
HM Revenue & Customs
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DT: Sudan: double taxation agreement, Article 10: Dividends

(1) Dividends paid by a company which is a resident of one of the Contracting States to a resident of the other Contracting State may be taxed in that other State.
(2) Such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State but where the recipient is the beneficial owner of the dividend the tax so charged shall not exceed 15 per cent of the gross amount of the dividends.
(3) Notwithstanding the provisions of paragraph (2) of this Article, so long as dividends paid by a company which is a resident of the Sudan are exempt from Sudan tax when paid to a recipient who is not resident in the Sudan then a recipient of such dividends who is a resident of the United Kingdom shall be exempt from any tax in the Sudan which is chargeable on dividends.
(4) Notwithstanding also the provisions of paragraph (2) of this Article, so long as an individual resident in the United Kingdom is entitled to a tax credit in respect of dividends paid by a company resident in the United Kingdom, the following provisions of this paragraph shall apply instead to the provisions of paragraph (2) of this Article: -
(a)

(i) where a resident of the Sudan is entitled to a tax credit in respect of such a dividend under sub-paragraph (b) 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.
(ii) Except as provided in sub-paragraph (a) (i) of this paragraph dividends derived from a company which is a resident of the United Kingdom by a resident of the Sudan who is the beneficial owner of the dividends shall be exempt from any tax which is chargeable in the United Kingdom on dividends.

(b) A resident of the Sudan who receives a dividend from a company which is a resident of the United Kingdom shall, subject to the provisions of sub-paragraph (c) of this paragraph and provided that he is the beneficial owner of the dividend, 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 that dividend and to the payment of any excess of such credit over his liability to united Kingdom tax.
(c) The provisions of sub-paragraph (b) 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 10 per cent or more of the voting power in the company paying the dividend. For the purpose 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.
(5) In this Article the term `dividends` means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights assimilated to income from shares by the taxation law of the State of which the company making the distribution is a resident and also includes any other item (other than interest relieved from tax under the provisions of Article 11 of this Convention) which under the law of the Contracting State of which the company paying the dividend is a resident, is treated as a dividend or distribution of a company.
(6) If the recipient of a dividend being a resident of a Contracting State owns 10 per cent or more of the class of shares in respect of which the dividend is paid, then paragraphs (2), (3) and (4) of this Article 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 is received in a period ending twelve months or more before the relevant date. For the purposes of this paragraph the term `relevant date` means the date on which the recipient of the dividend became the owner of 10 per cent or more of the class of shares in question.
Provided that this paragraph shall not apply if the recipient shows that the shares were acquired for bona fide commercial reasons and not primarily for the purpose of securing the benefit of this Article.
(7) The provisions of paragraphs (2), (3) and (4) of this Article shall not apply if the recipient of the dividends, being a resident of a Contracting State, carries on a trade or business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State professional services from a fixed base situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such a case the provisions of Article 7 or Article 14, as the case may be shall apply.
(8) Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in the other State.