FID scheme

April 1993
Accountancy;Apr93, Vol. 111 Issue 1196, p20
Trade Publication
The article reports on the foreign income dividend scheme proposed by the Chancellor of the Department of Treasury of Great Britain to address companies' problems on surplus advance corporation tax. Surplus advance corporation tax has long been a problem for companies, particularly when it arises from dividends paid by a company out of foreign source profits that have born foreign tax. Under the proposed scheme, a company would be able to pay a foreign income dividend with special tax treatment. Advance corporation tax would be payable on it in the normal way, but any surplus advance corporation tax paid on foreign income dividend out of foreign source profits would be refundable by the Exchequer. Shareholders would be treated as receiving income that had borne lower rate tax of 20%, but foreign income dividend would not carry any tax credit. There would be special ruled for international headquarters companies, for which surplus advance corporation tax can be a particular problem.


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