Information to US Shareholders Regarding Abolition of ACT Refund
Significant changes were made as of April 6, 1999 in the UK taxation of dividends paid by Diageo to US shareholders eligible for the benefits of the US-UK tax treaty. These changes apply to both holders of ordinary shares and ADRs representing ordinary shares.
Under prior law, for US federal income tax purposes a cash dividend paid by Diageo generally was accompanied by a UK tax credit equal to 25% of the cash dividend, and the sum of the dividend and the tax credit were subject to a 15% UK withholding tax. Thus, for example, if Diageo declared a dividend of 80 pence per share, there would be an accompanying tax credit of 20 pence per share and a UK withholding tax of 15 pence per share, resulting in an ACT refund of 5 pence per share in cash.
These rules are complex. Diageo staff are not able to give advice on US tax issues. Should you require advice, please contact an independent tax adviser.