Distributable Profits Charge
Please note that the DPC regime for companies has been repealed with effect for accounting periods commencing on or after 6 April 2008. The Attribution Regime for Individuals (ARI) applies from this date for members of relevant companies. Please see the section on ARI.
The Distributable Profits Charge (DPC) was introduced on 6 April 2006, for the year of assessment 2006/2007 onwards, at the same time as the mainstream 0% rate of income tax for companies. The DPC is required in order to encourage companies to continue to make distributions and to counter any tax planning opportunities that may exist in a 0% tax rate regime.
The DPC is not a corporate income tax; it is a measure designed to maintain income tax revenue flow from individuals now that the standard rate of corporate income tax is 0%. It is a charge on Manx resident members of companies: accounted for by the company on their behalf, and creditable against their personal income tax liability when distributions are eventually made.
The DPC is only applicable to non-distributing companies, which will be required to account for the charge only in respect of the amount of total distributable profits attributable to members resident in the Isle of Man. The qualifying criteria for distributing company status are detailed in GN36 - available for download below.
| Document Name | Number | Date of issue |
|---|---|---|
| Distributable Profits Charge Guidance Note | GN 36 | November 2009 |
| Distributable Profits Charge Voucher | n/a | n/a |
| Distributable Profits Charge Computation Form | R179 | n/a |
The following amendments and additions have been made to GN 36, Distributable Profits Charge, in the November 2009 release (the previous versions can be found in Downloadable Documents):
| Section | Details of Change |
|---|---|
| 4.4 – Matching of Distributions | Amended to advise that this flexible matching treatment only applied up to 6/4/2009 and includes reference to practice from April 2009. Includes clarification that the revised practice only applies to 'Distributions from Reserves' as defined on the PN. Mixing and matching can still be done with current year profit and reserves accumulated since April 2006 |
| 24 – Distributions from reserves | Notes added to state the dates between which this treatment was valid (6/4/2006 to 5/4/2008) and refers to GN38 for full details of later practices. Example 45 updated to clearly state that taxed profits and accounting reserves are the same and outlines the restriction where accounting reserves are lower. |
| 26 – DPC Credit Voucher & Appendix | Reference made to composite voucher and that it can be used instead of DPC credit voucher and new appendix G – Composite Company Distribution Voucher |
