The statements set out below are intended only as a general
guide to current UK and South African tax law (in respect of
the UK, as applied in England and Wales) and what is understood to
be current practice as at 22 March 2011, both of which are subject
to change, possibly with retrospective effect.
The comments relating to UK or South African resident
shareholders apply only to shareholders of Anglo American plc (the
“Company”) resident for tax purposes only in the
UK or South Africa respectively (except where express reference is
otherwise made) who hold ordinary shares in the Company
(“Shares”) as an investment and who are the absolute
beneficial owners of the Shares. Certain categories of shareholder,
such as traders, broker-dealers, insurance companies, collective
investment schemes and shareholders who have (or are deemed to
have) acquired their shares by virtue of an office or employment,
may be subject to special rules and this summary does not apply to
such shareholders. If shareholders are in any doubt about their tax
position, or are resident or otherwise subject to taxation in a
jurisdiction other than the UK or South Africa, they should consult
their own professional advisers.
The statements contained under the “UK resident
shareholders” and “Non-UK resident shareholders”
sections of the heading “Taxation of dividends and
distributions” reflect the Company’s understanding of
the correct interpretation of current UK tax law. However, there is
currently some doubt as to whether HM Revenue & Customs
(“HMRC”) agrees with this interpretation in relation to
distributions made following a reduction of capital and other
similar transactions. In such cases, there is a risk that HMRC may
seek to argue, in relation to certain classes of shareholders, that
such a distribution should not be taxed under the rules for income
distributions, but is instead within the charge to tax on
chargeable gains. In light of this uncertainty, shareholders are
advised to consult their own professional advisers in relation to
the implications of distributions from the Company.
- Taxation of dividends and distributions
- Taxation of capital gains
Taxation of dividends and distributions
UK resident shareholders
This paragraph applies only to shareholders who receive
dividends in pounds sterling and may not apply to shareholders who
receive dividends in US dollars or euros.
The Company will not be required to withhold tax at source when
paying a dividend.
Individual shareholders resident in the UK for tax purposes who
receive a dividend from the Company will be entitled to a tax
credit which such shareholders may set off against their total
income tax liability on the dividend. The tax credit will be equal
to 10% of the aggregate of the dividend and the tax credit (the
gross dividend) which is also equal to one ninth of the cash
dividend received. The tax credit will satisfy in full the
liability of UK resident individual shareholders who are liable to
income tax at the basic rate. UK resident individual shareholders
who are not liable to income tax in respect of the gross dividend
will not be entitled to repayment of the tax credit. In the case of
a UK resident individual shareholder who is liable to income tax at
the higher rate, the tax credit will be set against, but not fully
match, such shareholder's tax liability on the gross dividend and
he or she will have to account for additional income tax equal to
22.5% of the gross dividend (which is also equal to 25% of the cash
dividend received) to the extent that the gross dividend, when
treated as the top slice of his or her income, falls above the
threshold for higher rate income tax. In the case of a UK resident
individual shareholder who is subject to income tax at the
additional rate, the tax credit will also be set against, but not
fully match, the shareholder’s tax liability on the gross
dividend and he or she will have to account for additional income
tax equal to 32.5% of the gross dividend (which is also equal to
approximately 36% of the cash dividend received) to the extent that
the gross dividend, when treated as the top slice of the
shareholder’s income, falls above the threshold for
additional rate income tax.
UK resident taxpayers who are not liable to UK income tax
on dividends, including pension funds and charities, will not be
entitled to claim repayment of the tax credit attaching to
dividends paid by the Company. Shareholders who are within the
charge to corporation tax will be subject to corporation tax on
dividends paid by the Company, unless (subject to special rules for
such shareholders that are small companies) the dividends fall
within an exempt class and certain other conditions are met. It is
expected that the dividends paid by the Company would generally be
exempt for such shareholders. Such shareholders will not be able to
claim repayment of tax credits attaching to dividends.
Non-UK resident shareholders
Non-UK resident shareholders will not generally be able to claim
repayment from HMRC of any part of the tax credit attaching to
dividends paid by the Company. A shareholder resident outside the
UK may also be subject to foreign taxation on dividend income under
local law. A shareholder who is not resident in the UK (for tax
purposes) should consult his or her own tax adviser concerning his
or her tax liabilities on dividends received from the Company.
South African resident shareholders
A South African resident shareholder who is registered on the
South African branch register is unlikely to be subject to South
African income tax on any dividend from the Company under current
income tax legislation. This is because such dividends are paid
from South African reserves in terms of the Company's dividend
access share arrangements, and such dividends do not fall within
the definition of a foreign dividend in section 1 of the South
African Income Tax Act, 1962 (Income Tax Act). In addition, if the
shareholder is registered on the principal register, an exemption
from South African income tax on any dividend from the Company
applies under section 10(1)(k)(ii) (bb) of the Income
Tax Act. Companies subject to South African secondary tax on
companies will obtain a 'credit' in respect of this tax for
dividend income from the Company if the companies are registered as
shareholders on the Company's South African branch register.
The National Treasury has indicated that the secondary tax on
companies regime will be replaced by a divided withholding tax in
the future. The legislation governing the withholding tax regime is
anticipated during 2008/9.
Taxation of capital gains
UK resident shareholders
Shareholders who are resident or, in the case of individuals,
ordinarily resident in the United Kingdom, or who cease to be
resident or ordinarily resident in the United Kingdom for a period
of less than five years of assessment, or individuals who
carry on a trade, profession or vocation in the United Kingdom
through a branch or agency, or companies which carry on a trade in
the United Kingdom through a permanent establishment in the United
Kingdom, in each case to which the shares are attributable,
may depending on their circumstances (including the availability of
exemptions or reliefs) be liable to United Kingdom taxation on
chargeable gains in respect of gains arising from a sale or other
disposal of Shares.
The UK tax rules governing the taxation of chargeable gains
arising on the disposal of shares are complex and depend on the
precise circumstances that apply in each case. It is not therefore
possible to give individual advice to shareholders regarding their
liability to United Kingdom taxation on chargeable gains. The
amount of the liability will depend on a number of factors, the
principal ones being the amount of actual or deemed disposal
proceeds in respect of the shares, the amount of base cost in the
shares, the amount of any indexation (for corporate shareholders
only) and whether or not all or part of the holding is being
disposed of. The following statements are intended as a general
guide only to the calculation of a shareholder's base cost in
Shares held by that shareholder, and is based on certain
assumptions. Shareholders should consult their own professional
advisers for further and more detailed information.
Where a shareholder holds Shares as a result of holding shares
on 31 March 1982, for the purposes of United Kingdom taxation on
chargeable gains, the base cost will normally be the market value
of the shares as at 31 March 1982. Where a shareholder holds Shares
as a result of an acquisition of shares after 31 March 1982, the
base cost will normally be the acquisition cost of the shares.
Shareholders who held Anglo American plc ordinary shares at 12.01am
on 2 July 2007 (“Pre-Demerger Ordinary Shares”) will
have received Shares, Mondi plc ordinary shares and Mondi Limited
ordinary shares as a result of the demerger of the Mondi group, the
Mondi plc reduction of capital, the Anglo American share
consolidation and the Mondi plc share consolidation (together, the
“Mondi Transactions”). The effect of the Mondi
Transactions on shareholders' base cost is considered further below
(see “Pre-Demerger Ordinary Shares held at 12.01am on 2 July
2007”).
The position of shareholders who acquired their Shares by virtue of
holding shares in Minerals and Resources Corporation Limited,
Minorco S.A. or Anglo American Corporation of South Africa Limited
or by virtue of the De Beers transaction is considered below.
Pre-Demerger Ordinary Shares held at 12.01am on 2 July
2007
As a result of the Mondi Transactions, for every 100 Pre-Demerger
Ordinary Shares held as at 12.01am on 2 July 2007, shareholders
received (ignoring fractional entitlements) 91 Shares, 25 Mondi plc
ordinary shares and 10 Mondi Limited ordinary shares.
The holders of Pre-Demerger Ordinary Shares at 12.01am on 2 July
2007 who, either alone, or together with persons connected with
such holder, did not hold more than 5% of such shares, should not
have been treated as making a disposal or part disposal of their
Pre-Demerger Ordinary Shares for United Kingdom tax purposes as a
consequence of the Mondi Transactions. Instead, such shareholders
should have been treated as acquiring the Shares, the Mondi plc
ordinary shares and the Mondi Limited shares for an aggregate
amount equal to the amount for which their Pre-Demerger Ordinary
Shares were acquired.
The base cost of a shareholder's holding in Pre-Demerger
Ordinary Shares will therefore be apportioned between the Shares,
the Mondi plc ordinary shares, and the Mondi Limited ordinary
shares. HMRC have confirmed that an acceptable basis for making
such apportionment in practice would be by reference to the opening
quoted values of the Shares, the Mondi plc ordinary shares and the
Mondi Limited ordinary shares on the first day of dealings in such
shares.
The opening quoted values of these shares were such that a
shareholder's base cost in the Shares would on that basis be
approximately 94.25% of its original base cost in the Pre-Demerger
Ordinary Shares (the exact percentage will depend on the amount of
cash received by a shareholder in respect of fractional
entitlements arising on the Mondi plc reduction of capital, the
Mondi plc share consolidation and the Anglo American plc share
consolidation and the stamp duty paid by Mondi plc in respect of
the transfer of the Mondi Ltd ordinary shares pursuant to the Mondi
plc reduction of capital).
This summary of the UK tax position on a disposal of Shares does
not include any statement with regard to the tax position of
shareholders in Mondi plc or Mondi Limited. Holders of such shares
should, however, note that certain information regarding the base
cost in these shares can be found in Related downloads.
Minorco and Minorco Bermuda
In 1988, the Directors of Minerals and Resources Corporation
Limited (“Minorco Bermuda”) were advised that the
exchange of Minorco Bermuda ordinary shares for Minorco S.A.
(“Minorco”) ordinary shares should not constitute a
disposal for the purposes of United Kingdom taxation of chargeable
gains. The Minorco ordinary shares should effectively be treated as
the same asset as the shares in Minorco Bermuda. In 1999, the
holders of Minorco ordinary shares were advised that any holders
who, either alone, or together with persons connected with such
holder, did not hold more than 5% of Minorco ordinary shares, would
not be treated as making a disposal for United Kingdom tax purposes
as a consequence of receiving Anglo American plc ordinary shares in
exchange for such Minorco ordinary shares. The Anglo American plc
ordinary shares would effectively be treated as the same asset as
the shares in Minorco.
On this basis, shareholders would have been treated as acquiring
the Anglo American plc ordinary shares for an amount equal to the
amount for which their Minorco ordinary shares were acquired (where
the Minorco ordinary shares were acquired as a result of the
exchange for Minorco Bermuda ordinary shares, this should be an
amount equal to the amount for which their Minorco Bermuda ordinary
shares were acquired).
The market value of a Minorco Bermuda ordinary share on 31 March
1982 was 344p per share (xd). On the above mentioned basis,
ignoring the effects of indexation and fractional entitlements, for
those shareholders who held Minorco Bermuda ordinary shares on 31
March 1982 and who participated in the share exchanges referred to
above and in the three-for-one Bonus Issue in June 2001, the
adjusted 31 March 1982 market value of an Anglo American plc
ordinary share prior to the Mondi Transactions was 86p per share
(to the nearest penny) (it is assumed that no other sales or
purchases of the Minorco Bermuda, Minorco or Anglo American
ordinary shares were made after 31 March 1982).
As discussed in further detail in “Pre-Demerger Ordinary
Shares held at 12.01am on 2 July 2007” above, and on the
basis set out there, a shareholder's total base cost in the Shares
for the purposes of United Kingdom taxation of chargeable gains
will be approximately 94.25% of its original base cost in the Anglo
American plc ordinary shares (the Pre-Demerger Ordinary Shares).
However, in consequence of the Anglo American plc share
consolidation on 2 July 2007, the per share base cost of a
shareholder will have increased (this is because the aggregate base
cost of a shareholder's holding of shares will now be spread across
91 Shares rather than across the 100 Anglo American plc ordinary
shares originally held).
Therefore, on the above mentioned basis (ignoring fractional
entitlements), the adjusted 31 March 1982 market value of a Share
acquired by virtue of a holding in Minorco Bermuda share will be
89p per share (to the nearest penny) (i.e. 94.25% of 86p x (100
÷ 91)).
Anglo American Corporation of South Africa
The Company also acquired Anglo American Corporation of South
Africa Limited (“AAC”) ordinary shares by way of a
scheme of arrangement with effect from 24 May 1999. The holders of
AAC ordinary shares who, either alone, or together with persons
connected with such holder, did not hold more than 5% of the AAC
ordinary shares, should not have been treated as making a disposal
for the purposes of United Kingdom taxation of chargeable gains as
a consequence of receiving Anglo American plc ordinary shares in
exchange for such AAC ordinary shares. The Anglo American plc
ordinary shares would effectively be treated as the same asset as
the shares in AAC. On this basis, shareholders would have been
treated as acquiring the Anglo American plc shares for an amount
equal to the amount for which their AAC ordinary shares were
acquired.
The market value of an AAC ordinary share on 31 March 1982 was
455p per share. On the above mentioned basis, ignoring the effects
of indexation and fractional entitlements, for those shareholders
who held AAC ordinary shares on 31 March 1982 and who participated
in the share exchange referred to above and in the three-for-one
Bonus Issue in June 2001, the adjusted 31 March 1982 market value
of an Anglo American ordinary share prior to the Mondi Transactions
was 114p per share (to the nearest penny) (it is assumed that no
other sales or purchases of the AAC or Anglo American ordinary
shares were made after 31 March 1982).
As discussed in further detail in “Pre-Demerger Ordinary
Shares held at 12.01am on 2 July 2007” above, and on the
basis set out there, a shareholder's total base cost in the Shares
for the purposes of United Kingdom taxation of chargeable gains
will be approximately 94.25% of its original base cost in the Anglo
American plc ordinary shares (the Pre-Demerger Ordinary Shares).
However, in consequence of the Anglo American plc share
consolidation on 2 July 2007, the per share base cost of a
shareholder will have increased (this is because the aggregate base
cost of a shareholder's holding of shares will now be spread across
91 Shares rather than across the 100 Anglo American plc ordinary
shares originally held).
Therefore, on the above mentioned basis (ignoring fractional
entitlements), the adjusted 31 March 1982 market value of a Share
acquired by virtue of a holding in AAC will be 118p per share (to
the nearest penny) (i.e. 94.25% of 114p x (100 ÷ 91)).
De Beers
For those shareholders who became beneficial owners of Anglo
American plc ordinary shares as a result of the De Beers
Transaction(1) implemented on 8 June 2001 and who were
and remain resident only in the UK for tax purposes and who held
the De Beers linked units as an investment:
a) The acquisition price of an Anglo American plc ordinary share
received as Scheme Consideration(2) was 1,165.5p per
share; and
b) The acquisition price of an Anglo American plc ordinary share
received under the Mix and Match election(2) was
1,099.5p per share.
As discussed in further detail in “Pre-Demerger Ordinary
Shares held at 12.01am on 2 July 2007” above, a shareholder's
base cost in the Shares for the purposes of United Kingdom taxation
of chargeable gains will be approximately 94.25% of its original
base cost in the Anglo American plc ordinary shares (the
Pre-Demerger Ordinary Shares). However, in consequence of the Anglo
American plc share consolidation on 2 July 2007, the per share base
cost of a shareholder will have increased (this is because the
aggregate base cost of a shareholder's holding of shares will now
be spread across 91 Shares rather than across the 100 Anglo
American plc ordinary shares originally held).
Therefore, on the above mentioned basis (ignoring fractional
entitlements):
a) The adjusted acquisition price of an Anglo American plc
ordinary share received as Scheme Consideration is 1,207p per share
(to the nearest penny) (i.e. 94.25% of 1,165.5p x (100 ÷
91)); and
b) The adjusted acquisition price of an Anglo American plc ordinary
share received under the Mix and Match election was 1,139p per
share (to the nearest penny) (i.e. 94.25% of 1,099.5p x (100
÷ 91)).
South African resident shareholders
Shareholders will be liable to either CGT or income tax on any
gains made on disposal of the shares purchased depending on their
individual status (determined primarily by the intention with which
they acquired their shares), the length of time they held the
shares coupled with whether or not they have made or can make safe
haven elections.
Section 9B of the Income Tax Act allows taxpayers to elect that the
proceeds on the disposal of shares in listed companies be deemed to
be of a capital nature, provided the shares in question are held
for a continuous period of five years or more (Safe Haven
Election). If a taxpayer has previously made such election with
respect to any such listed shares held by him, that prior election
automatically binds him in respect of the future disposal of listed
shares. This provision only applies to disposals of listed shares
prior to 1 October 2007.
During 2007 Section 9C was introduced and applies to any
disposal of qualifying shares (which includes listed shares and
unlisted SA resident shares) on or after 1 October 2007. In terms
of section 9C the disposal of qualifying shares held for a period
of three years prior to the date of disposal is deemed to be of a
capital nature. Although section 9C departs from the election
period of five years introduced by section 9B it does not alter the
general principles.
If a shareholder has disposed of the shares, having held them
for less than three years, then the treatment of any gain arising
on the disposal of the Shares will be determined by reference to
the individual circumstances of the taxpayer, and depending on the
circumstances may be subject to income tax or CGT.
South Africa introduced CGT with effect from 1 October 2001 and
it applies to any incremental growth in the value of assets from
this date on the disposal of the assets. All South African
residents are subject to CGT. The base cost of an Anglo American
ordinary share held by a shareholder for CGT purposes on 1 October
2001 as determined by the tax authorities was R99.88 per ordinary
share. This cost may not necessarily be the cost to use to
determine any capital gain or loss as there are other methods which
may be applicable in particular circumstances.
(1)The De Beers transaction was the recommended offer
by DB Investments dated 10 April 2001 (as amended on 30 April 2001)
to holders of De Beers linked units which was implemented on 8 June
2001.
(2)These terms are as defined in the DB Investments
offer document dated 10 April 2001.