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HMRC internal manual

Double Taxation Relief Manual

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

 

(1)

(a) Dividends derived from a company which is a resident of the United Kingdom by a resident of Zimbabwe may be taxed in Zimbabwe.

(b) Where a resident of Zimbabwe is entitled to a tax credit in respect of such a dividend under paragraph (2) of this Article 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 20 per cent.

(c) Except as aforesaid dividends derived from a company which is a resident of the United Kingdom by a resident of Zimbabwe who is subject to tax thereon in Zimbabwe shall be exempt from any tax in the United Kingdom which is chargeable on dividends.

(2) A resident of Zimbabwe who receives a dividend from a company which is a resident of the United Kingdom shall, subject to the provisions of paragraph (3) of this Article and provided that he is subject to tax thereon in Zimbabwe, 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 that tax credit over his liability to United Kingdom tax.

(3) Paragraph (2) of this Article 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 paragraph two companies shall be deemed to be associated if one controls directly or indirectly more than 50 per cent of the voting power in the other company, or a third company controls more than 50 per cent of the voting power in both of them.

(4) Dividends derived from a company which is a resident of Zimbabwe b a resident of theUnited Kingdom may be taxed in the United Kingdom. Such dividends may also be taxed in Zimbabwe and according to the laws of Zimbabwe but provided that the recipient of the dividends is subject to tax thereon in the United Kingdom the tax so charged in Zimbabwe shall not exceed:

(a) 5 per cent of the gross amount of the dividends if the recipient is a company which controls directly or indirectly at least 25 per cent of the voting power in the company paying the dividends;

(b) 20 per cent of the gross amount of the dividends in all other cases.

(5) The term `dividends` as used in this Article 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 which, under the law of the Contracting State of which the company paying the dividend is aresident, is treated as a dividend or distribution of a company.

(6) The provisions of paragraphs (1), (2) and (4) of this Article shall not apply if the recipient of the dividends, being a resident of a Contracting State, carries on 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 independent personal 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 15, as the case may be, shall apply.

(7) 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 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 undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in that other State.