Taxation (International and Other Provisions) Act 2010 section 57

Credit in respect of dividend: taking account of underlying tax

Section 57 establishes how underlying tax on dividends is to be taken into account when determining whether credit relief is available against UK corporation tax, income tax or capital gains tax.

• Where a double taxation agreement provides for underlying tax to be considered in granting credit relief on a dividend, the calculation method depends on whether the dividend is paid by a non-UK resident company to a UK resident company, or in any other circumstances.
• For dividends paid by a non-resident company to a UK resident company, the underlying tax is calculated under section 58; for all other dividends, it is calculated under section 61.
• No underlying tax credit is available if the law of any territory outside the UK allows a resident of that territory a tax deduction for an amount determined by reference to the dividend in question.
• Additional rules may apply: underlying tax paid in the UK or in a territory other than the paying company's territory may in certain cases be treated as if paid in the paying company's territory, and underlying tax on profits of a dividend-paying company lower in a chain may be treated as underlying tax on profits of the company receiving the dividend.