Summary

Recently, share buy-backs have become a frequent phenomenon in the stock markets of most countries. Under the tax systems of many jurisdictions, share buy-backs can result in dividend distributions for income tax purposes. For listed companies, it can also be the case that individual minority shareholders selling their shares do not and cannot know that it is the company itself that is buying their shares. Such shareholders often expect to be able to apply beneficial capital gains tax rules and not those for the taxation of dividend distributions. In contrast, the company knows that it is buying its own shares and the tax authorities may, therefore, be able to subject the company to dividend taxation.

With this in mind, the book discusses recent tax issues relating to share buy-backs, as well as the current practice in the countries covered and the relevant company law provisions. It also describes how a company is taxed in respect of the acquisition, holding and alienation of its own shares.