AIJTY

Will the dividend trigger any tax implications for US and international shareholders?

Created August 07, 2025 at 08:07 PM

Short answer:

Yes – the special cash dividend will create a tax event for both U.S.‑based and non‑U‑S shareholders. For U.S. investors the payment is treated as ordinary dividend income (subject to the “qualified‑dividend” rules if the underlying share‑holding meets the holding‑period tests). For foreign investors the dividend is U.S.‑source income, so the United States may impose a withholding tax (generally 30 % unless a tax treaty reduces the rate) and the shareholder’s home‑country tax rules will determine whether the dividend is taxable locally, whether a foreign‑tax credit can be claimed, and whether any additional reporting is required.

Below is a comprehensive, step‑by‑step overview of the likely tax consequences, broken out by shareholder type, and the practical actions you should take.

1. What the dividend actually is

Detail from the press release	Interpretation
Special cash dividend of US $0.0995 per ordinary share (equivalent to US $1.99 per… – the “per …” wording in the release is a typo; the amount is $0.0995 per share).	A cash distribution to all registered shareholders of record on the record‑date (the date the company will announce). Cash dividends are taxable in the hands of the recipient in virtually every jurisdiction.

Key dates you’ll need to watch (typical for U.S. ADRs on OTCQB):
- Declaration date – Aug 7 2025 (press release)
- Record date – usually 2‑3 business days after declaration; the company will issue a formal notice.
- Ex‑dividend date – one business day before the record date. If you buy the shares on or after the ex‑date you do not receive the dividend.
- Payment date – the date the cash is actually transferred (often 5‑10 business days after the record date).

2. U.S. Shareholders (including U.S. persons, U.S. citizens, green‑card holders, and U.S. tax‑paying entities)

Tax concept	How it applies to this dividend
Ordinary dividend vs. qualified dividend	The dividend will be ordinary dividend income on your 2025 tax return. Whether it can be qualified (i.e., taxed at the lower long‑term‑capital‑gains rates) depends on the holding‑period test for the underlying shares: you must have held the shares for more than 60 days during the 121‑day period that begins 60 days before the ex‑dividend date (for common stock). If you meet that test, the $0.0995 per share is a qualified dividend; otherwise it is non‑qualified and taxed at ordinary income rates.
Form 1099‑DIV	The broker or the company’s transfer agent will issue a Form 1099‑DIV (or 1042‑S for foreign persons) by January 31 2026 showing the total cash dividend you received in 2025. You must report this on Form 1040, line 3b (qualified dividends) and line 3a (non‑qualified).
Tax rate	• Qualified dividend – taxed at the 0 %, 15 % or 20 % rates (depending on your taxable income). • Non‑qualified dividend – taxed at your ordinary marginal income tax rate (10 %‑37 %).
Net investment income tax (NIIT)	If your modified adjusted gross income (MAGI) > $200,000 (single) or $250,000 (married filing jointly), a 3.8 % NIIT applies to net investment income, which includes this dividend.
State tax	Most states treat dividend income the same way as federal (i.e., ordinary income). Check your state’s rules.
Reporting on Schedule B	If you receive more than $1,500 in total ordinary dividends (including this one) you must complete Schedule B (Interest and Ordinary Dividends). The $0.0995 per share is tiny, but if you own a large number of shares the total could exceed $1,500.
Holding‑period timing	Because the dividend is “special” (i.e., a one‑off cash distribution) the qualified‑dividend test still applies. If you bought the shares after the ex‑dividend date you will not receive the dividend, so there is no tax consequence. If you owned the shares before the ex‑dividend date and held them through the required 60‑day window, you can claim the qualified‑dividend benefit.

Practical steps for U.S. investors

Confirm the record and ex‑dividend dates (the company will publish them in a follow‑up notice).
Check your holding period – if you bought the shares within 60 days of the ex‑date, the dividend will be non‑qualified.
Wait for the 1099‑DIV from your broker (usually by 31 Jan 2026).
Report on Form 1040 (qualified vs. non‑qualified as appropriate).
If you’re in a high‑income bracket, be prepared for the 3.8 % NIIT on net investment income.
Consider state tax implications.

3. International (Non‑U.S.) Shareholders

3.1. U.S. tax perspective (source‑based)

Issue	Details
U.S. source dividend	Because the company is a U.S.‑registered entity (OTCQB: AIJTY), the dividend is considered U.S.‑source income, even though the business operates in China.
Withholding tax	The default 30 % U.S. withholding tax on cash dividends for non‑resident aliens is applied unless a tax treaty reduces it. The withholding is generally performed by the broker/depositary bank that holds the ADRs.
Tax treaty rates	Many countries have a reduced treaty rate (often 15 %). For example: • Canada – 15 % • United Kingdom – 15 % • Germany – 15 % • Singapore – 15 % Check the specific treaty between the U.S. and your residence country.
Form 1042‑S	The withholding agent will issue a Form 1042‑S (Foreign Person’s U.S. Income Tax Return) summarising the gross dividend, the amount withheld, and the net amount paid. You will receive this by March 15 2026 (or later, depending on the broker).
Potential refund	If the treaty rate is lower than the amount actually withheld, you can file Form 1040NR (U.S. Non‑Resident Alien Income Tax Return) to claim a refund. Many brokers automatically apply the treaty rate, but you should verify.

3.2. Home‑country tax perspective

Issue	Typical treatment (varies by jurisdiction)
Dividend taxable?	Most countries tax foreign‑source dividend as ordinary income (e.g., UK, Canada, Australia, EU members). Some jurisdictions (e.g., Hong Kong) do not tax foreign‑source dividends for residents, but you still have U.S. withholding.
Foreign‑tax credit	If your home country taxes the dividend, you may be able to claim a foreign‑tax credit for the U.S. tax withheld (or for the U.S. tax you actually paid). The credit is generally limited to the amount of home‑country tax attributable to the U.S. source income.
Double‑taxation relief	Many countries have double‑taxation agreements (DTAs) with the U.S. that provide either a credit or an exemption‑method. The exact mechanics differ: • Credit method – you credit the U.S. tax against your home‑country tax liability. • Exemption method – the dividend may be exempt from home‑tax, but you still must report it.
Reporting thresholds	Some countries only require reporting if the dividend exceeds a certain amount (e.g., €1,000 in Germany). If you receive a modest amount, you may still need to file a foreign‑income schedule.
Currency conversion	You must convert the USD amount to your local reporting currency using the exchange rate on the payment date (or an average rate if your tax authority permits).

3.3. Practical steps for foreign investors

Identify the applicable tax treaty between your residence country and the United States. Look up the reduced dividend withholding rate (often 15 %).
Confirm the withholding agent’s application of the treaty rate (provide a certificate of residency to the broker if required).
Obtain Form 1042‑S (or the equivalent statement) showing the gross dividend, tax withheld, and net amount received.
Determine home‑country tax treatment:
- Is the dividend taxable in your jurisdiction?
- Can you claim a foreign‑tax credit for the U.S. tax?
- Do you need to file a foreign‑income schedule?
File any required refund claim with the IRS (Form 1040NR) if the treaty rate was not correctly applied.
Keep records of the dividend amount, the exchange rate used, and the tax‑credit documentation for at least 7 years (typical audit window).

4. Summary of Key Take‑aways

Shareholder	Taxable?	U.S. tax rate	Withholding?	Home‑country tax?	Reporting forms
U.S. person	Yes (ordinary dividend)	Ordinary (10‑37 %) or qualified (0‑20 %)	No withholding (but may have backup withholding if no TIN)	Not applicable	1099‑DIV → Form 1040 (Schedule B if > $1,500)
Foreign person (non‑resident)	Yes (U.S. source)	30 % default, reduced by treaty (often 15 %)	Withholding by broker (30 % or treaty rate)	Depends on residence: usually taxable, with possible foreign‑tax credit	1042‑S (U.S.) + local tax return (foreign‑income schedule, credit claim)
Foreign person (resident of a no‑tax‑on‑dividends jurisdiction)	Yes (U.S. source)	Same as above	Same as above	May be exempt locally (e.g., Hong Kong) but still must report U.S. withholding	1042‑S; local filing may be optional

5. What you should do right now

Locate the official dividend notice (the company will issue a “Dividend Declaration” that lists the exact record date, ex‑dividend date, and payment date).
If you are a foreign investor, provide your certificate of residency to the broker/transfer agent to ensure the correct treaty rate is applied.
Track the cash receipt in your brokerage account; note the USD amount and the date of receipt for exchange‑rate conversion.
Retain the 1042‑S (or 1099‑DIV) statement when it arrives; you’ll need it for both U.S. and home‑country tax filings.
Consult a qualified tax professional in your jurisdiction before filing, especially if you:
- Hold a large number of shares (the dividend could push you over reporting thresholds).
- Reside in a country with a complex treaty or limited foreign‑tax credit rules.
- Anticipate a refund claim with the IRS for over‑withheld tax.

Final note

The dividend itself is modest per share, but the total tax impact depends on the size of your holding and the tax regime you fall under. The key points are:

U.S. shareholders: ordinary dividend income, possible qualified‑dividend treatment, report on 1040/1099‑DIV, NIIT may apply.
Foreign shareholders: U.S. source dividend → 30 % withholding unless reduced by treaty, report on Form 1042‑S, and then apply home‑country tax rules (often a credit for U.S. tax paid).

Because the tax landscape varies widely and the dividend is a “special” cash distribution, you should verify the exact dates and treaty rates and obtain professional advice to avoid unexpected tax liabilities or missed refund opportunities.