Taxation (International and Other Provisions) Act 2010 section 61

Calculation if section 58 does not apply

Section 61 sets out how to calculate the amount of underlying tax to be taken into account when a dividend is not paid by a company resident outside the United Kingdom to a UK resident company (i.e. situations falling outside section 58).

• First, determine the total foreign tax borne on the relevant profits by the company paying the dividend.
• Then, work out the proportion of that foreign tax attributable to the share of relevant profits represented by the dividend.
• If the foreign territory's tax law has grossed up the dividend by an amount that can be set off against the recipient's own local tax (or refunded if it exceeds that tax), calculate that increase.
• The underlying tax to be taken into account is the amount from the proportionate calculation, reduced by any such gross-up amount.