On October 16,2023, FTA released guide to provide general guidance on the Exempt Income i.e. Dividend and Participation Exemption. The key highlights are given below-
- The scope of dividend been expanded to include the following under the preview of dividend :
- Ordinary Dividend
- Dividend in Kind
- Other distribution
- Non-arm length payment to shareholders
- Issuance of bonus shares are in effect payment out of company profit to its shareholders, would cover under the definition of dividend.
- In case of natural person (resident or non-resident) deriving dividend from Foreign juridical person (Non-resident person), then said foreign dividend will be subject to Corporate Tax if it is attributed to a Business or Business activity and does not represent Personal Investment Income. Exemption can be availed subject to Participation exemption conditions.
Please refer to our separate communication in this regard for further details