DT3874 - Botswana: double taxation agreement, Article 10: Dividends

This agreement applies for periods before the new comprehensive agreement has effect (see DT3850).

1. Dividends derived from a company which is a resident of Botswana by a resident of the United Kingdom may be taxed in the United Kingdom. Such dividends may also be taxed in Botswana but where such dividends are beneficially owned by a resident of the United Kingdom the tax so charged shall not exceed 15 per cent of the gross amount of the dividends.
   
   
2.  

(i) Dividends derived from a company which is a resident of the United Kingdom by a resident of Botswana may be taxed in Botswana.

(ii) Where a resident of Botswana is entitled to a tax credit in respect of such a dividend under the provisions of subparagraph (b) of this paragraph tax may also be charged in the United Kingdom and according to the laws of the United Kingdom, on the aggregate of the amount or value of that dividend and the amount of that tax credit at a rate not exceeding 15 per cent.

(iii) Except as provided in sub-paragraph (a) (ii) of this paragraph, dividends derived from a company which is a resident of the United Kingdom and which are beneficially owned by a resident of Botswana shall be exempt from any tax in the United Kingdom which is chargeable on dividends.

3. The term `dividends` as used in this Article means income from shares, or other rights, not being debt-claims, participating in profits, as well as income from corporate rights assimilated to income from shares by the taxation law of the State of which the company making the distribution is a resident and also includes any other item (other than interest relieved from tax under the provisions of Article 11 of this Agreement) which under the law of the Contracting State of which the company paying the dividend is a resident, is treated as a dividend or distribution of a company.
   
   
4. The provisions of paragraphs (1) and (2) of this Article shall not apply where a resident of a Contracting State has in the other Contracting State a permanent establishment through which he carries on a business or a fixed base from which he performs professional services and the holding by virtue of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such a case the provisions of Article 7 or Article 13, as the case may be, shall apply.
   
   
5. If the beneficial owner of a dividend being a resident of a Contracting State owns 10 per cent or more of the class of shares in respect of which the dividend is paid then paragraphs (1) and (2) of this Article shall not apply to the dividend to the extent that it can have been paid only out of profits which the company paying the dividend earned or other income which it received in a period ending twelve months or more before the relevant date. For the purposes of this paragraph the term `relevant date` means the date on which the beneficial owner of the dividend became the owner of 10 per cent or more of the class of shares in question. However this paragraph shall not apply if the beneficial owner of the dividend shows that the shares were acquired for bona fide commercial reasons and not primarily for the purposes of securing the benefit of this Article.
   
   
6. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on undistributed profits even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in that other State.