SEC “Investment income on which tax has already been paid (usually deducted at source) and thus exempted from additional tax by the investor. Income on unit trust is franked in many countries”.


PWC: “This refers to dividend income which has suffered withholding tax as final tax and therefore not subject to further tax. Where such income is further distributed as in the case of a holding company, the withholding tax due on fur their distribution should be offset with the withholding tax suffered when the income was received. The practical challenge here is that withholding tax on receipt would have been paid to the FIRS whereas further distribution would often be to individuals whose withholding taxes are due to states. It therefore becomes difficult to offset FIRS withholding tax paid against withholding tax due to states. The law should be amended to remove the requirement to account for withholding tax on redistribution of franked investment income”.


Company Income Tax Act (Section 80: 3) : Dividend received after the deduction of tax shall be regarded as franked investment income of the company receiving the dividend and shall not be charged to further tax as part of the profits of the recipient company. However, where such income is redistributed and tax is to be accounted for on the gross amount of distribution in accordance with subsection (1) of this section, the company may off-set the withholding tax which it has itself suffered on the same income. 





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