A reduction in the tax liability that is granted to dividends distributed by a resident subsidiary to its parent company in order to avoid double taxation of such dividends. It is necessary for the parent company to own a minimum percentage of the subsidiary’s capital, which usually varies from one country to another, as well as a minimum holding period. In some countries, the deduction is extended to dividends received from non-resident subsidiaries.
« Back to Glossary IndexDeduction for Distributed Dividends
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