...there is concern whether Section 43 (6) will not become another section 19 (dividend tax rule) with all its controversies ...In the "change era", Nigeria can definitely do without vexatious provisions or those which could potentially attract the dangerous label of "the more you look, the less you see"...
Dividend is the payment received by a shareholder from a company after distribution of profits. Thus, under section 9(3) of the Companies Income Tax Act (as amended) (CITA) "dividend" means in relation to a company not in the process of being wound up or liquidated, any profits distributed, whether such profits are of a capital nature or not including any amount equal to the nominal value of bonus shares, debentures or securities awarded to the shareholders." It is the primary return that shareholders expect on their investment in a company's business.
One of the primary goals that the Board or other managers of the business of the company strives to deliver is to increase the wealth of shareholders by paying or owing dividend and/or ensuring that the stock price goes up. Interim dividends are dividend payments made before a company's Annual General Meeting (AGM) and final financial statements. Interim dividends would appear to be based on the company's interim financial statements as the case may be from time to time within the accounting period.
The legal basis for declaration and payment of interim dividend remains the provision of section 379 of the Companies and Allied Matters Act (CAMA). Thus, section 379(2) provides, "the company may from time to time pay to the members such interim dividends as appear to the directors to be justified by the profits of the company". That interim dividend in the hands of the receiving shareholder, to the extent that it is not pioneer dividend or dividend arising from profits from a petroleum operations or exclusively free zone operations, is subject to tax is not contestable.
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