Taxation of Untaxed Profits Distributed as Dividends

The Finance Act, 2018 introduced a tax at corporate rate on untaxed gains or profits from which dividends are distributed with effect from 1st January 2019.


The new provision has been the subject of erroneous interpretation including in the media. In addition, KRA has received various enquiries in relation to application of the new provision.


Therefore, KRA wishes to clarify that the new section 7A of the Income Tax Act, Cap 470, does not apply to distribution of income as dividends, where the income;


  • Is received by a registered collective investment scheme.


  • Is dividend received by a resident company from a subsidiary, whether local or foreign.
  • Has been subjected to capital gains tax provisions.


  • Has been subjected to final tax.


For any enquiry/clarification in relation to this matter, please contact the call centre on Tel: 020 4999 999 / 0711 099 999 or Email:


Commissioner for Domestic Taxes


Taxation of Untaxed Profits Distributed as Dividends