Page 62 - Companies & Dividend Tax

DIVIDENDS

VAT consequences

• The dividend in specie to the holder of a share

(who is a connected person in relation to the

company) involves no consideration payable by

them thus, the value of the supply in terms of

section 10(23) (of the VAT Act) will be Rnil.

• Where the dividend in specie accrues to a person

who would not be entitled to deduct input tax in

terms of section 16(3) and who is a connected

person in relation to the company, the value of the

supply in terms of section 10(4) is its open-market

value.

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