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Restate, with minor changes, certain enactments relating to tax; to make |
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provision for purposes connected with the restatement of enactments by other |
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tax law rewrite Acts; and for connected purposes. |
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Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and |
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consent of the Lords Spiritual and Temporal, and Commons, in this present |
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Parliament assembled, and by the authority of the same, as follows:— |
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(1) | The following Parts contain provisions relating to international aspects of |
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(a) | Parts 2 and 3 (double taxation relief), |
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(b) | Parts 4 and 5 (transfer pricing and advance pricing agreements), |
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(c) | Part 6 (tax arbitrage), |
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(d) | Part 7 (tax treatment of financing costs and income), and |
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(e) | Part 8 (offshore funds). |
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(2) | Part 9 contains amendments of tax legislation to relocate enactments to |
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(3) | In particular, Part 9 contains amendments of TCGA 1992, ITTOIA 2005 and |
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ITA 2007 that insert provisions relating to— |
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(a) | oil activities (see section 364 and Schedule 1), |
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(b) | alternative finance arrangements (see section 365 and Schedule 2), |
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(c) | leasing arrangements involving finance leases or loans (see section 367 |
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(d) | sale and lease-back etc (see section 368 and Schedule 4), |
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(e) | factoring of income etc (see section 369 and Schedule 5), and |
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(f) | UK representatives of non-UK residents (see section 370 and Schedule |
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(4) | Part 10 contains provisions of general application (including definitions for the |
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(5) | For abbreviations used in this Act see section 373, and for defined expressions |
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used in Parts 2 to 8 see Schedule 11. |
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Double taxation arrangements and unilateral relief arrangements |
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Double taxation arrangements |
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2 | Giving effect to arrangements made in relation to other territories |
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(1) | If Her Majesty by Order in Council declares— |
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(a) | that arrangements specified in the Order have been made in relation to |
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any territory outside the United Kingdom with a view to affording |
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relief from double taxation in relation to taxes within subsection (3), |
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(b) | that it is expedient that those arrangements should have effect, |
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| those arrangements have effect. |
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(2) | If arrangements have effect under subsection (1), they have effect in accordance |
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(d) | petroleum revenue tax, and |
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(e) | any taxes imposed by the law of the territory that are of a similar |
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character to taxes within paragraphs (a) to (d). |
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(4) | In this Part “double taxation arrangements” means arrangements that have |
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effect under subsection (1). |
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3 | Arrangements may include retrospective or supplementary provision |
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(1) | Section 2(1) gives effect to arrangements even if the arrangements include— |
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(a) | provision for relief from tax for periods before the passing of this Act, |
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(b) | provision for relief from tax for periods before the making of the |
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(2) | Section 2(1) gives effect to arrangements even if the arrangements include— |
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(a) | provision as to income that is not subject to double taxation, |
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(b) | provision as to chargeable gains that are not subject to double taxation, |
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(c) | provision as to foreign-field consideration that is not subject to double |
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(3) | In subsection (2)(c) “foreign-field consideration” means consideration brought |
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into charge to tax under section 12 of the Oil Taxation Act 1983 (charge to |
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petroleum revenue tax on consideration in respect of United Kingdom use of a |
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4 | Meaning of “double taxation” in sections 2 and 3 |
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(1) | For the purposes of sections 2 and 3, any amount within subsection (2) is to be |
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treated as having been payable. |
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(2) | An amount is within this subsection if it is an amount of tax that would have |
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been payable under the law of a territory outside the United Kingdom but for |
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(a) | given under the law of the territory with a view to promoting |
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industrial, commercial, scientific, educational or other development in |
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a territory outside the United Kingdom, and |
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(b) | about which provision is made in double taxation arrangements. |
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(3) | References in sections 2 and 3 to double taxation are to be read in accordance |
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5 | Orders under section 2: contents and procedure |
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(1) | If an Order under section 2 (“the later Order”) revokes an earlier Order under |
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that section, the later Order may contain transitional provisions that appear to |
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Her Majesty to be necessary or expedient. |
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(2) | An Order under section 2 is not to be submitted to Her Majesty in Council |
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unless a draft of the Order has been laid before and approved by a resolution |
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6 | The effect given by section 2 to double taxation arrangements |
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(1) | Subject to this Part and Part 18 of ICTA, double taxation arrangements have |
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effect in accordance with subsections (2) to (4) despite anything in any |
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(2) | Double taxation arrangements have effect in relation to income tax and |
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corporation tax so far as the arrangements provide— |
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(a) | for relief from income tax or corporation tax, |
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(b) | for taxing income of non-UK resident persons that arises from sources |
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(c) | for taxing chargeable gains accruing to non-UK resident persons on the |
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disposal of assets in the United Kingdom, |
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(d) | for determining the income or chargeable gains to be attributed to non- |
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(e) | for determining the income or chargeable gains to be attributed to |
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agencies, branches or establishments in the United Kingdom of non-UK |
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(f) | for determining the income or chargeable gains to be attributed to UK |
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resident persons who have special relationships with non-UK resident |
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(g) | for conferring on non-UK resident persons the right to a tax credit |
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under section 397(1) of ITTOIA 2005 in respect of qualifying |
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distributions made to them by UK resident companies. |
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(3) | Double taxation arrangements have effect in relation to capital gains tax so far |
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as the arrangements provide— |
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(a) | for relief from capital gains tax, |
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(b) | for taxing capital gains accruing to non-UK resident persons on the |
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disposal of assets in the United Kingdom, |
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(c) | for determining the capital gains to be attributed to non-UK resident |
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(d) | for determining the capital gains to be attributed to agencies, branches |
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or establishments in the United Kingdom of non-UK resident persons, |
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(e) | for determining the capital gains to be attributed to UK resident |
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persons who have special relationships with non-UK resident persons. |
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(4) | Double taxation arrangements have effect in relation to petroleum revenue tax |
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so far as the arrangements provide for relief from petroleum revenue tax |
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charged under section 12 of the Oil Taxation Act 1983 (charge to petroleum |
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revenue tax on consideration in respect of United Kingdom use of a foreign |
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(5) | In the case of relief under this Chapter that is not also relief under Chapter 2, |
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the relief is not available in respect of special withholding tax (a corresponding |
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rule applies in relation to relief under Chapter 2 as a result of the definition of |
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foreign tax given by section 21). |
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(6) | Relief under subsection (2)(a), (3)(a) or (4) requires a claim. |
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(7) | In subsection (3) “UK resident person” and “non-UK resident person” have the |
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meaning given by section 989 of ITA 2007. |
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(8) | In subsection (5) “special withholding tax” has the same meaning as in Part 3 |
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(1) | The Commissioners for Her Majesty’s Revenue and Customs may make |
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regulations generally for carrying out the provisions of the treaty sections or |
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any double taxation arrangements. |
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(2) | Regulations under subsection (1) may in particular provide for securing that |
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relief from taxation imposed by the law of the territory to which any double |
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taxation arrangements relate does not enure for the benefit of persons not |
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(3) | Subsection (4) applies to tax if— |
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(a) | the tax is deductible from a payment but, in order to comply with |
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double taxation arrangements, has not been deducted, and |
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(b) | it is discovered that the arrangements did not apply to that payment. |
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(4) | Regulations under subsection (1) may in particular provide for authorising |
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recovery of tax to which this subsection applies— |
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(a) | by assessment on the person entitled to the payment from which the tax |
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(b) | by deduction from subsequent payments. |
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(5) | In subsection (1) “the treaty sections” means— |
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section 134(3) to (6) so far as relating to section 134(1). |
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(6) | This section does not apply in relation to— |
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(a) | petroleum revenue tax, or |
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(b) | taxes imposed by the law of a territory outside the United Kingdom |
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(i) | are of a similar character to petroleum revenue tax, and |
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(ii) | are not of a similar character to income tax, corporation tax or |
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Unilateral relief arrangements |
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8 | Interpretation: “unilateral relief arrangements” means rules 1 to 9, etc |
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(1) | In this Part “unilateral relief arrangements”, in relation to a territory outside |
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the United Kingdom, means the rules set out in sections 9 to 17. |
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(2) | In sections 11 to 17, and in Chapter 2 (except section 29) in its application to |
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relief under unilateral relief arrangements, references to tax payable or paid |
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under the law of a territory outside the United Kingdom include only— |
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(a) | taxes which are charged on income and which correspond to income |
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(b) | taxes which are charged on income or chargeable gains and which |
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correspond to corporation tax, and |
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(c) | taxes which are charged on capital gains and which correspond to |
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(3) | For the purposes of subsection (2), tax may correspond to income tax, |
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corporation tax or capital gains tax even though it— |
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(a) | is payable under the law of a province, state or other part of a country, |
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(b) | is levied by or on behalf of a municipality or other local body. |
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9 | Rule 1: the unilateral entitlement to credit for non-UK tax |
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(a) | paid under the law of the territory, |
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(b) | calculated by reference to income arising, or any chargeable gain |
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accruing, in the territory, and |
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(c) | corresponding to UK tax, |
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| is to be allowed against any income tax or corporation tax calculated by |
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reference to that income or gain. |
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(a) | paid under the law of the territory, |
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(b) | calculated by reference to any capital gain accruing in the territory, and |
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(c) | corresponding to UK tax, |
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| is to be allowed against any capital gains tax calculated by reference to that |
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(3) | For the purposes of subsection (1), profits from, or remuneration for, personal |
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or professional services performed in the territory are to be treated as income |
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arising in the territory. |
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(4) | For the purposes of subsection (1)(c), tax corresponds to UK tax if— |
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(a) | it is charged on income and corresponds to income tax, or |
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(b) | it is charged on income or chargeable gains and corresponds to |
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(5) | For the purposes of subsection (2)(c), tax corresponds to UK tax if it is charged |
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on capital gains and corresponds to capital gains tax. |
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(6) | For the purposes of subsections (4) and (5), tax may correspond to income tax, |
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corporation tax or capital gains tax even though it— |
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(a) | is payable under the law of a province, state or other part of a country, |
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(b) | is levied by or on behalf of a municipality or other local body. |
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(7) | If the territory is the Isle of Man or any of the Channel Islands, subsections |
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(1)(b) and (2)(b) have effect with the omission of “in the territory”. |
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(8) | Subsections (1) and (2) are subject to sections 11 and 12. |
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10 | Rule 2: accrued income profits |
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(1) | Subsection (2) applies if— |
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(a) | a person is treated under section 628(5) of ITA 2007 as making accrued |
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income profits in an interest period, |
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(b) | the person would, were the person to become entitled in the relevant |
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tax year to any interest on the securities concerned, be liable in respect |
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of the interest to tax chargeable under ITTOIA 2005 on relevant foreign |
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(c) | the person is liable under the law of the territory to tax in respect of |
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interest payable on the securities at the end of the interest period or the |
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person would be so liable if the person were entitled to that interest. |
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(2) | Credit is to be allowed against income tax calculated by reference to the |
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(3) | The amount of the credit allowed under subsection (2) is given by—![equation: cross[times[char[A],char[I],char[P]],times[char[F],char[T],char[R]]]](missing.gif) |
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AIP is the amount of the accrued income profits, and |
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FTR is the rate of tax to which the person is or would be liable as |
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mentioned in subsection (1)(c). |
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(4) | Subsection (2) is subject to section 11. |
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(5) | In subsection (1)(b) “the relevant tax year” means the tax year in which, under |
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section 617(2) of ITA 2007, the accrued income profits are treated as made. |
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(6) | Expressions used in this section and in Chapter 2 of Part 12 of ITA 2007 |
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(accrued income profits) have the same meaning as in that Chapter. |
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