Taxation (International and Other Provisions) Act 2010 section 64

Meaning of "dividend-paying chain" of companies

Section 64 defines what constitutes a "dividend-paying chain" of companies for the purposes of claiming credit relief for underlying tax paid by lower-tier overseas companies in a corporate group structure.

• A dividend-paying chain exists when one company pays a dividend to another, and there is at least one further company below it in the chain that also pays dividends upward
• Each company in the chain (other than the top two) must be a "10% associate" of the company immediately above it, meaning the higher company controls at least 10% of its voting power or ordinary share capital
• The chain can extend through multiple tiers — from a simple three-company chain to longer successions of companies, each paying dividends up to the next level
• The 10% control test can be met directly, indirectly, or through a parent company that itself holds at least 50% of voting power in the company claiming the association