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5.6. Qualification of Specific Income Categories for Tax Purposes

Dividend Income

Dividend includes:

  • any payment derived by a member from a company, whether received as a division of profits, in the course of liquidation or reconstruction, in a reduction of share capital or redeemable preference shares or otherwise;
  • any amount treated as deemed dividend by the Commissioner General in the case of a closely-held company;
  • a capitalization of profits whether by way of issuance of bonus shares, increase in the amount of paid-shares or otherwise, whether distributed or not.

However, dividend does not include any payment:

  • matched by a payment made by the member to the company; or
  • debited to capital, share premium or similar account.  

Interest Income

Interest includes any payment, including discount or premium, made under a debt obligation which is not a return of capital, any swap or other payments functionally equivalent to interest, and any commitment, guarantee or service fee paid in respect of debt obligation or swap agreement.

Royalty Income

Royalty includes any payment, including the payment of premium, derived as consideration for the use of or right to use, any copyright of literary, artistic or scientific work, including cinematograph films, software or video or audio recordings whether the work is in electronic format or otherwise, any patent, trademark, design or model, plan, secret formula or process, any industrial, commercial or scientific equipment, and any information concerning industrial, commercial, or scientific experience. It also includes the consideration for ancillary services as well as the consideration for refraining from the use of the above.

Rental Income

Rent includes a payment for the use or right to use property, including equipment and the rendering or assistance ancillary to such use or right.

Natural Resource Payment

A natural resource includes minerals, petroleum, water or any other resource that may be taken from the land or the sea. A natural resource payment includes a payment in the nature of a premium or like amount for the right to take natural resources or calculated with reference to the quantity or value of natural resources taken from the land or the sea.