Prescribed rates of relevant withholding taxU.K.
3.—(1) Subject to [F1paragraphs (5) and (6)], the rate of relevant withholding tax which is prescribed in relation to any manufactured overseas dividend is the rate which is equal to the rate (or, if more than one, the highest rate) at which tax would have been payable (and not repayable) under the law of the overseas territory specified in paragraph (3) in respect of–
(a)an overseas dividend paid on the same date that the manufactured overseas dividend is paid to a person who is–
(i)resident in the United Kingdom and not carrying on a trade outside the United Kingdom through a [F2permanent establishment],
(ii)subject to tax under the law of the United Kingdom, and
(iii)not subject to a special relationship with any other person as respects any commercial or financial dealings,
in respect of the same kind of overseas securities as those in respect of which the manufactured overseas dividend was paid, and
(b)the overseas tax credit, if any, relating to that overseas dividend.
(2) The reference in paragraph (1) above to tax which would have been payable is a reference to tax which would have been eligible for relief either–
(a)pursuant to arrangements made with the government of the overseas territory specified in paragraph (3) which have effect by virtue of section 788 of the Taxes Act and relate to the overseas dividend concerned, or
(b)by virtue of other provisions of Part XVIII of the Taxes Act other than section 790(5)(c)(ii) of that Act.
(3) The overseas territory specified in this paragraph is the territory of the government or public or local authority which issued the securities in question or, where the securities were issued by any other body of persons not resident in the United Kingdom, the territory under whose law that tax would have been payable.
F3(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F4(5) Where the recipient of the manufactured overseas dividend is a company, the reference in paragraph (1) to the highest rate is a reference to the highest rate that would have applied in relation to the overseas dividend specified in paragraph (1)(a) paid to a company which is within paragraphs (i) to (iii) of that paragraph.
(6) Where the manufactured overseas dividend—
(a)is paid to, or for the benefit of, a registered pension scheme (within the meaning given in Part 4 of the Finance Act 2004), or
(b)is linked solely to pension business for the purposes of section 438 of the Taxes Act at the time that the payment is made,
the reference in paragraph (1) to the highest rate is a reference to the rate that would have been suffered by the recipient in relation to the overseas dividend of which that manufactured overseas dividend is representative.]
Textual Amendments
F1Words in reg. 3(1) substituted (1.10.2007) by The Income Tax (Manufactured Overseas Dividends) (Amendment) Regulations 2007 (S.I. 2007/2487), regs. 1, 3(2)
F2Words in reg. 3(1)(a)(i) substituted (1.11.2003) by The Income Tax (Manufactured Overseas Dividends) (Amendment) Regulations 2003 (S.I. 2003/2582), regs. 1, 4(2)
F3Reg. 3(4) omitted (1.11.2003) by virtue of The Income Tax (Manufactured Overseas Dividends) (Amendment) Regulations 2003 (S.I. 2003/2582), regs. 1, 4(3)
F4Reg. 3(5)(6) added (1.10.2007) by The Income Tax (Manufactured Overseas Dividends) (Amendment) Regulations 2007 (S.I. 2007/2487), regs. 1, 3(3)
Commencement Information