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5.1. Tax Base for Resident Entities

Resident companies are subject to corporation tax ('CIT') on their worldwide income earned from within and outside Kiribati.

Capital gains derived from the sale of any asset which is used in the business, are taxed as ordinary income, at the same rate as CIT, regardless of the nature of the asset. Any loss on the sale of a capital asset used in the business is allowed to be carried forward (See Sec. 7.).

A resident company receiving dividends from another resident company is entitled to a deduction of up to 90% of the net dividends received, subject to certain conditions. Net dividends are the amount of the dividend received as reduced (not below zero) by any deduction available to the resident company. The dividend received exemption is denied if the dividend payment is part of a transaction which is:

  • substantially equivalent to a loan; or
  • substantially equivalent to the sale of a membership interest at a profit but only to the extent such profit would be assessable income.

Likewise, the dividend received exemption is denied where a company takes part in a dividend stripping transaction and receives a dividend from a resident company.