Ghana - Dividend

Article 10. Dividends

1.   Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

2.   However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:

a)   5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 10 per cent of the capital of the company paying the dividends;

b)  10 per cent of the gross amount of the dividends in all other cases.

3.   The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of paragraph 2.

4.   The provisions of paragraph 2 shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

5.   The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident and also includes any other item which, under the laws of the Contracting State of which the company paying the dividend is a resident, is treated as a dividend or distribution of dividends of a company.

6.   The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State, of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

7.   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 the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

Protocol:

IX. Ad Article 10

1.   Notwithstanding paragraph 2 of Article 10, the Contracting State of which the company is a resident shall not levy a tax on dividends paid by that company, if the beneficial owner of the dividends is a pension fund referred to in paragraph 2 of Article 4.

2.   It is understood that, for the purposes of this Convention,

a)   the term “jouissance shares” means securities that grant the right to participate in the net profit of the company and do not represent capital of the company but represent a non financial contribution, such as a contribution in know how;

b)  the term “jouissance rights” means rights, whether or not documented by official papers, to participate in the net profit of the company, that do not represent capital of the company but represent a non financial contribution, such as a contribution in know how;

c)   the term “mining shares” means shares in a mining company subject to mining law and organised in a specific legal form;

d)  the term “founders’ shares” means shares that are issued as remuneration for services rendered by founders during the constitution of a company and do not represent capital of the company.

X. Ad Articles 10, 11 and 12

Where tax has been levied at source in excess of the amount of tax chargeable under the provisions of Articles 10, 11 or 12, applications for the refund of the excess amount of tax have to be lodged with the competent authority of the State having levied the tax, within a period of three years after the expiration of the calendar year in which the tax has been levied.

XI. Ad Articles 10 and 13

It is understood that income received in connection with the (partial) liquidation of a company or a purchase of own shares by a company is treated as income from shares and not as capital gains.