British American Business Council of Greater Philadelphia

The UK currently taxes foreign dividends received by UK companies (with the availability of a tax credit for overseas taxes suffered), but exempts domestic dividend receipts. Draft legislation proposes the introduction of a dividend exemption system which will operate by making all dividend receipts taxable, unless they fall within one of a list of exemptions. The effect will be that both foreign and domestic dividends received by large and medium groups on ordinary shares and most non-ordinary shares will be exempt from UK tax. A targeted anti-avoidance rule will operate to prevent avoidance activity seeking to exploit these dividend exemptions.

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