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HMRC internal manual

Double Taxation Relief Manual

Falkland Islands: Dividends

Under the 1997 agreement (see DT6850) United Kingdom shareholders in Falkland Island companies are no longer entitled to a Falkland Islands tax credit. The Falkland Islands tax deducted from dividends at the agreement rate of 10 per cent (or 5 per cent where the beneficial owner of the dividends is a United Kingdom resident company controlling directly or indirectly not less than 10per cent of the voting power in the company paying the dividend) qualifies for credit as a direct tax (see INTM164010(c)). The reductions to the above rates are not given if the dividend is effectively connected (see INTM153110 fifth sub-paragraph) with a business carried on by the United Kingdom resident recipient through a permanent establishment or fixed base which the recipient has in the Falkland Islands. Where a Falkland Islands company pays a dividend to a United Kingdom company which controls, directly or indirectly, at least 10 per cent of the voting power in the Falkland Islands company, credit may also be given for the underlying tax (Article 24(1)(b) and see INTM164010 (d)).