Sir,
I enjoyed reading Ned Shelton's very informative article on Danish holding companies (International Tax Review, December/January 1999), but one of his comments in regard to Asia Pacific taxation requires correction. On page 28, Shelton writes: ?If one considers the jurisdictions based on the English common law system, the exemption system is either almost or completely non-existent. Examples of such countries include Australia, Canada, the UK, the US and New Zealand.?
Corrections:
1. Australia's usual method for relieving international double taxation on dividend income is the exemption method, not the credit method. Specifically, dividends paid by companies resident in 59 listed countries (comprising the vast bulk of outbound investment by Australian companies) are exempt from Australian tax in the hands of an Australian company shareholder holding a non-portfolio (at least 10%) shareholding.
2. New Zealand's international conduit system (which was introduced in1998) has the effect that, to the extent that a New Zealand company is used as an intermediate holding company between a non-resident operating subsidiaries (which is the context of the above-quoted statement), New Zealand applies the exemption method to relieve international double taxation on foreign dividend income.
3. In Canada, generally dividends received from non-resident corporations are included in the taxable income of the recipient. However, when dividends are received from a foreign affiliate, the recipient may be able to exclude all or a substantial portion of those dividends from taxable income, depending on the nature of income out of which dividends are paid.
