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Dividends from Guernsey-resident companies (i.e., non-exempt companies) are treated as taxable income when declared. The income is grossed up for tax purposes at the standard rate of income tax no matter whether tax has been deducted at the standard rate or not. The recipient of a dividend from which tax has been deducted is entitled to an immediate tax credit equal to the deduction which will be applied against his tax liability.
Guernsey-resident companies may deduct income tax at the standard rate of 20% from dividend payments but are not required to do so. If tax is deducted, a Guernsey company must account for it to the income tax authorities within one month of being deducted. The tax concerned is treated as a payment on account of the company's own liability to income tax on its profits.
Withholding tax at 20% is deducted from payments of interest (other than bank interest), annuities, royalties and other payments made to non-residents. Such income tax must be accounted for to the income tax authorities within one month of being deducted. No tax is withheld where these payments are made to residents of Guernsey.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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