Taxation (International and Other Provisions) Act 2010 section 21

Meaning of "the arrangements", "the non-UK territory", "foreign tax" etc.

Section 21 defines key terms used throughout the chapter on double taxation relief by way of credit, ensuring consistent interpretation of references to overseas tax arrangements, foreign territories, and different categories of tax.

• "The arrangements" and "the non-UK territory" refer back to the double taxation arrangements and the specific overseas territory identified in section 18, which establishes the basic entitlement to credit relief.
• "Foreign tax" means tax charged under the law of the relevant non-UK territory that qualifies for credit under the arrangements, but specifically excludes special withholding tax (a separate category dealt with in Part 3 of the Act).
• "Underlying tax" refers to tax on a dividend that is not charged directly on the dividend itself or deducted from it — in practice, this is the corporation tax paid by the company distributing the dividend on the profits out of which the dividend is paid.
• These definitions must be read alongside other provisions that clarify what is meant by tax being "payable", "chargeable", or "not chargeable directly or by deduction", including the rules on tax sparing relief for developing countries.