Tax on dividend received by a company

[Star]

Dear all,

If the principal activity of the company is investment in securities, then how the dividend received by the company will be taxed?

Whether the income tax deducted at source from dividend received would be refundable in case of business tax loss ?


Regards,


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[Abdul Majid]

Dear Star

Read the section 5 and section 8 of the income tax ordinance 2001,Section 8 clearly state that this section shall not apply to a company.This means that dividend received by a company will be taxed under the normal tax regime but subject to tax at the rate of 10%.
And the loss incurred by the company can be sett of against the dividend income.
In case of loss the tax deducted on dividend will be refundable to the company

Regards,

Majid

[Star]

Section 5(2) requires that

(2) The tax imposed under sub-section (1) on a person who receives a
dividend shall be computed by applying the relevant rate of tax to the <u>gross amount of the dividend.</u>.

I understand that if the tax is to be levied on gross amount of income from dividend then expenses may not be claimable or tax deducted at source may have remote chances of refund in case of tax loss to the company?


Regards,

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