ARTICLE · 28 MARCH 2000

2000 Budget: International Tax

KPMG

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In a speech delivered on the morning following the Budget of 21 March 2000, Joy Svasti-Salee, Head of International Tax at KPMG, made the following key points.

There are proposed changes to the double tax relief (DTR) rules which are very severe.

The ability to mix dividends overseas is severely restricted with the DTR rate attaching to dividends from lower tier companies being capped at 30%.
The ability to specify the profits out of which dividends are paid is severely restricted.

There are also proposals which significantly tighten the Controlled Foreign Company (CFC) rules.

Holding companies with non-dividend income may no longer satisfy the exempt activities test.
Intra-group service companies with more than 50% of their income from group companies may now be CFCs.

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