Investors should note that withholding tax at a rate of 24 per cent will apply to dividends paid out and other profit distributions made after April 6th next. The obligation to pay the withholding tax rests with the company issuing the dividend or its authorised agent.

The tax owed will be deducted automatically by the company, based on the gross dividend, and paid to the Revenue Commissioners. Shareholders liable to tax at the higher rate of 46 per cent will be required, as before, to declare their dividend income in their tax returns and to pay the balance due to the Exchequer. The tax coincides with the abolition of tax credits on dividends as shareholders will benefit from the phased lowering of corporation tax on profits to 12.5 per cent by 2003.