Investment Incentives Act · 1984 Revised Edition · Chapter II
22. Certain dividends exempted from income tax
Official textFrom Attorney General's Chambers, unchanged
As soon as any amount of income of a pioneer company has become exempted under section 21, that amount shall be credited to an account to be kept by that pioneer company for the purposes of this section(that account and company being in this section and section 24 referred to as the exempt account and the relevant company respectively).
Where the exempt account is in credit at the date on which any dividends are paid by the relevant company out of income which has been exempted under section 21, an amount equal to those dividends or that credit, whichever is the less, shall be debited to the exempt account.
So much of the amount of any dividends debited to the exempt account under subsection(2) as is received by a shareholder in the relevant company shall, if the Collector is satisfied with the entries in the exempt account, be exempt from tax under the Income Tax Act in the hands of that shareholder.
Any dividends debited to the exempt account under subsection (2) shall be treated as having been distributed to the shareholders (or any particular class of shareholders) of the relevant company in the same proportions as those in which the shareholders in question were entitled to payment of the dividends giving rise to the debit.
Until the Collector is satisfied that there is no further need to maintain the exempt account, the relevant company shall deliver to the Collector a copy of the exempt account made up to a date specified by him whenever it is called upon to do so by notice in writing sent by the Collector to the company's registered office.
Where —
an amount is received by way of dividend from the relevant company by a shareholder;
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that amount is exempt from tax under the foregoing subsections;
that shareholder is a company, any dividends paid by that shareholding company to its shareholders shall, to the extent that the Collector is satisfied that the dividends so paid are paid out of that amount, be exempt from tax in the hands of those shareholders.