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What is a dividend and dividends tax?

This is article number four in the series What taxes should my business comply with? In the piece published on 03 April 2018 we listed a range of taxes that you will need to consider when running a business. In this piece we will look at dividends tax and how it impacts on the business and shareholders.

As a business owner you are building a business with the main goal to generate and create wealth for the shareholders. In most cases you will probably be the only shareholder, however the rules don’t change when there is other shareholder involved. The principle remains – you are in business to ultimately create wealth. One of the few ways that a shareholder can externalize profits other than a traditional salary is to declare a dividend from after tax profits to its shareholders.

What is dividends?