Section 14

in subsection (1) by substituting for the word “twelve”

the word “six”; and

in paragraph (2)(b) by substituting for the word “twelve”

the word “six”.

Amendment of section 108 16.

Section 108 of the principal Act is amended—

by inserting after subsection (2D) the following subsection:

“(2E) Notwithstanding any other provision of this

Act, where a dividend is paid, credited or distributed with or without deduction of tax during the basis year for the year of assessment 1998, the amount of the dividend received by the shareholder shall be deemed to be a dividend of such a gross amount as after deduction of tax at the rate of twenty-eight per cent would be equal to—

the amount in fact paid or credited; or

17

Finance

where the dividend consists of property other than money, the amount of the market value of that property at the time of the dividend’s distribution, and a sum equal to the difference between that gross amount and the amount mentioned in paragraph (a) or

, as the case may be, shall be deemed to have been deducted from the dividend as tax.”; and

by inserting after subsection (4D) the following subsection:

“(4E) In any case where tax has been deducted or deemed to have been deducted at the rate of thirty per cent on any dividend paid, credited or distributed during the basis year for the year of assessment 1998 to which subsection (2E) applies, the compared total shall be determined at the rate of twenty-eight per cent.”.

Amendment of section 110 17.

Section 110 of the principal Act is amended—

by substituting for subsection (1) the following subsection:

“(1) Any tax which is deducted from any dividend under section 108 or from any interest or royalty under section 109 or from any payment for services, technical advice, assistance, or rental or other income under section 109B (including any amount recovered by the

Director General pursuant to section 109(2) or 109B(2)

but excluding any increase thereof) shall, when the dividend, interest, royalty, or payment for services, technical advice, assistance, or rental or other income is gross income of a person from a source of his for the basis period for a year of assessment, be set off against the tax charged on his chargeable income, if any, for that year.”; and

by inserting after subsection (1D) the following subsection:

“(1E) Notwithstanding subsection (1), where tax on any dividend paid, credited or distributed during the basis year for the year of assessment 1998 has been deducted at the rate of thirty per cent, the tax to be set off under subsection (1) shall be the sum deemed to be the tax deducted from such dividend under section 108(2E).”.

18

Amendment of section 120 18.

Paragraph 120(e) of the principal Act is amended by inserting after the word “section” the words “83(5) or”.

Amendment of Schedule 1 19.