Finance and investment cost set out in Article (24), Clause (6) of the Law, shall be determined, based on one of the following methods:
Allocation Method:
This method shall be applied if the sole purpose of obtaining these funds is to invest in realizing legally tax exempt revenues. Should it be the case, the finance and investment cost shall be the interest paid in return for the funds obtained.
Pro Rata Division Method:
This method shall be applied if investing in the realization of legally tax exempt revenues is not the sole purpose of obtaining these funds. Should it be the case, the finance and investment cost of the “exempt revenues shall be determined as follows:
Total legally tax exempt revenues
Finance and investment cost Total overall revenues the company realized during the year
Article (47-Bis):
If the net revenues exceed the maximum limit of tax exemption prescribed in Article (36), Clause (5) of the Law, in any of the exempt years, the taxpayer shall be required to remit the tax due on amounts in excess of that established limit, when submitting the tax return for the relevant tax year.
Article (52-Bis):
In applying the provision of Article (46-Bis) of the Law, apart from free shares, dividends shall be recognised as taxable income when they are put under the disposal of the shareholder, by transferring them from the distributing entity to that shareholder, whether the distribution decision is taken by the company’s board of directors, general assembly, or any other competent authority. Temporary distribution shall have the same treatment, provided the cost of acquisition of free shares, according to Article (46-Bis4), should be set at the nominal value of the share.
Determination of dividends at the value of the dividend to be distributed, in any form, from shares and stocks, shall be made in accordance with what has been recorded in the resolutions of the company’s general assembly, or in those of the board of directors, or in the company’s reports, accounts or any other documents, or shall be made based on an acknowledgment submitted by the person in charge of the company’s management within thirty days from the end of the fiscal year. The tax return shall include a statement of the dividends to be distributed.
Every distributing entity shall submit to the Tax Authority the minutes and appendices of the resolutions of the general assembly, and of the board of directors, pertaining to distribution of profits, within thirty days from the date of issuance of such resolutions.
Partnerships shall withhold and remit the taxable amount on dividends of their shareholders, to the Authority no later than the deadline set for the company’s submission of its tax return.
Article (52-Bis-l):
The tax rate on dividends provided for in Article (46-Bis) of the Law, which have been realized abroad· during the year, shall be fixed according to Article (8) of the Law. A resident natural person is entitled to deduct the amount of the foreign tax paid on dividends, and deduction shall be effected within the tax computed pursuant to Article (46-Bis-6) of the Law.
Article (52-Bis-2):
In applying the provision of Article (46-bis- 2), second paragraph, of the Law, the central depository and registry company, and depository banks, licensed to practice the activity, as the case may be, or the entity distributing the taxable profits, shall remit the amounts withheld to the Central Department for Gathering of Deduction and Collection Forms on account of the tax no later than the fifth working day of the month following the month in which the tax has been collected. Remittances shall be effected on the Form (42 – Dividends), accompanied by a cheque, or shall be effected in cash, or via electronic means of payment, as.prescribed in these Executive Regulations.
It shall deliver a receipt to the taxpayer of every amount that has been withheld from him on account of the tax, or notify him thereof.
Article (52-Bis 3):
In applying the provision of Article (46-Bis-5), second paragraph, of the Law, the central depository and registry company, and depository banks, licensed to practice the activity, as the case may be, or the entity carrying out the transaction shall notify the Central Department for Gathering of Deduction and Collection forms on account of the tax), of that transaction. Notification shall be effected on Form (43 – Capital Gains) no later than the end of January every year.
