Taxation (International and Other Provisions) Act 2010 section 13

Rule 5: credit for tax charged directly on dividend

Section 13 sets out when unilateral credit relief is available for overseas tax that has been charged directly on a foreign dividend payment.

• This rule operates as part of the framework in section 12(1) for determining when credit is allowed for overseas tax on dividends.
• Credit is available where overseas tax is charged directly on a dividend paid by a company resident in the overseas territory, whether by a direct tax charge, deduction at source, or otherwise.
• A key condition is that neither the paying company nor the dividend recipient would have borne the tax if the dividend had not been paid, confirming a direct link between the dividend and the tax.
• This ensures that tax credits are only available for taxes specifically triggered by the dividend payment, rather than taxes arising from other income or circumstances.