Dividend Distribution Tax

Dividend distribution tax (DDT) is a tax imposed on companies when they distribute dividends to their shareholders. This tax is paid by the company before the dividend is distributed, meaning shareholders receive the dividend amount after the tax has been deducted. DDT ensures that shareholders do not have to pay additional tax on the dividend income in certain jurisdictions. However, DDT may differ across countries, and in some cases, shareholders may still be liable to pay taxes on the dividends they receive, depending on the tax regulations in their country of residence.

Example

A company declares a dividend of $1 per share but must first pay DDT, resulting in shareholders receiving less than the full $1 per share.