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Session 2009 - 10 Internet Publications Other Bills before Parliament

Taxation (International and Other Provisions) Bill

Taxation (International and Other Provisions) Bill
[AS AMENDED IN JOINT COMMITTEE]
The Bill is divided into two volumes. Volume I contains the Clauses. Volume II
contains the Schedules to the Bill.
Contents
Part 1
Overview
1    Overview of Act
Part 2
Double taxation relief
Chapter 1
Double taxation arrangements and unilateral relief arrangements
Double taxation arrangements
2    Giving effect to arrangements made in relation to other territories
3    Arrangements may include retrospective or supplementary provision
4    Meaning of “double taxation” in sections 2 and 3
5    Orders under section 2: contents and procedure
6    The effect given by section 2 to double taxation arrangements
7    General regulations
Unilateral relief arrangements
8    Interpretation: “unilateral relief arrangements” means rules 1 to 9, etc
9    Rule 1: the unilateral entitlement to credit for non-UK tax
10    Rule 2: accrued income profits
11    Rule 3: interaction between double taxation arrangements and rules 1 and 2
12    Rule 4: cases in which, and calculation of, credit allowed for tax on dividends
13    Rule 5: credit for tax charged directly on dividend
14    Rule 6: credit for underlying tax on dividend paid to 10% associate of payer
15    Rule 7: credit for underlying tax on dividend paid to sub-10% associate
16    Rule 8: credit for underlying tax on dividend paid by exchanged associate
17    Rule 9: credit in relation to dividends for spared tax
Bill 44                                                                                                  54/5
Taxation (International and Other Provisions) Bill ii
Chapter 2
Double taxation relief by way of credit
Effect to be given to credit for foreign tax allowed against UK tax
18    Entitlement to credit for foreign tax reduces UK tax by amount of the credit
19    Time limits for claims for relief under section 18(2)
20    Foreign tax includes tax spared because of international development relief
Interpretation of Chapter
21    Meaning of “the arrangements”, “the non-UK territory”, “foreign tax” etc
Credits where same income charged to income tax in more than one tax year
22    Credit for foreign tax on overlap profit if credit for that tax already allowed
23    Time limits for claims for relief under section 22(2)
24    Claw-back of relief under section 22(2)
Cases in which credit not allowed
25    Credit not allowed if relief allowed against overseas tax
26    Credit not allowed under arrangements unless taxpayer is UK resident
27    Credit not allowed if person elects against credit
Exceptions to requirement to be UK resident
28    Unilateral relief for Isle of Man or Channel Islands tax
29    Unilateral relief for tax on income from employment or office
30    Unilateral relief for non-UK tax on non-resident’s UK branch or agency etc
Calculating income or gains in respect of which credit is allowed
31    Calculation of income or gain where remittance basis does not apply
32    Calculation of amount received where UK tax charged on remittance basis
Limits on credit: general rules
33    Limit on credit: minimisation of the foreign tax
34    Reduction in credit: payment by reference to foreign tax
35    Disallowed credit: use as a deduction
Limit on, and reduction of, credit against income tax
36    Amount of limit
37    Credit against tax on trade income: further rules
38    Credit against tax on royalties: further rules
39    Credit reduced by reference to accrued income losses
Limit on credit against capital gains tax
40    Amount of limit
Taxation (International and Other Provisions) Bill iii
Limit on total credit against income tax and capital gains tax
41    Amount of limit
Limit on credit against corporation tax
42    Amount of limit
43    Profits attributable to permanent establishment for purposes of section 42(2)
44    Credit against tax on trade income
45    Credit against tax on trade income: anti-avoidance rules
46    Applying section 44(2): asset in hedging relationship with derivative contract
47    Applying section 44(2): royalty income
48    Applying section 44(2): “portfolio” of transactions, arrangements or assets
49    Restricting section 44(3) if company is a bank or connected with a bank
Calculating tax for purposes of section 42(2)
50    Tax for period on loan relationships
51    Tax for period on intangible fixed assets
Allocation of deductions etc to profits for purposes of section 42
52    General deductions
53    Earlier years’ non-trading deficits on loan relationships
54    Non-trading debits on loan relationships
55    Current year’s non-trading deficits on loan relationships
56    Non-trading debits on intangible fixed assets
Taking account of foreign tax underlying dividends
57    Credit in respect of dividend: taking account of underlying tax
58    Calculation if dividend paid by non-resident company to resident company
59    Meaning of “relevant profits” in section 58
60    Underlying tax to be left out of account on claim to that effect
61    Calculation if section 58 does not apply
62    Meaning of “relevant profits” in section 61
Taking account of tax underlying dividends that is not foreign tax
63    Non-UK company dividend paid to 10% investor: relief for UK and other tax
Tax underlying dividend treated as underlying tax paid by dividend’s recipient
64    Meaning of “dividend-paying chain” of companies
65    Relief for underlying tax paid by company lower in dividend-paying chain
66    Limitations on section 65(4)
Tax underlying dividends: restriction of relief, and particular cases
67    Restriction of relief if underlying tax at rate higher than rate of corporation tax
68    Meaning of “avoidance scheme” in section 67
69    Dividends paid out of transferred profits
70    Underlying tax reflecting interest on loans
71    Foreign taxation of group as single entity
Taxation (International and Other Provisions) Bill iv
Unrelieved foreign tax on profits of overseas permanent establishment
72    Application of section 73(1)
73    Carry-forward and carry-back of unrelieved foreign tax
74    Rules for carrying back unrelieved foreign tax
75    Two or more establishments treated as a single establishment
76    Former and subsequent establishments regarded as distinct establishments
77    Claims for relief under section 73(1)
78    Meaning of “overseas permanent establishment”
Action after adjustment of amount payable by way of UK or foreign tax
79    Time limits for action if tax adjustment makes credit excessive or insufficient
80    Duty to give notice that adjustment has rendered credit excessive
Schemes and arrangements designed to increase relief: anti-avoidance
81    Giving a counteraction notice
82    Conditions for the purposes of section 81(1)
83    Schemes and arrangements referred to in section 82(4)
84    Section 83(2) and (4): schemes enabling attribution of foreign tax
85    Section 83(2) and (4): schemes about effect of paying foreign tax
86    Section 83(2) and (4): schemes about claims or elections etc
87    Section 83(2) and (4): schemes that would reduce a person’s tax liability
88    Section 83(2) and (4): schemes involving tax-deductible payments
89    Contents of counteraction notice
90    Consequences of counteraction notices
91    Counteraction notices given before tax return made
92    Counteraction notices given after tax return made
93    Amendment, closure notices and discovery assessments in section 92 cases
94    Information made available for the purposes of section 92(4)
95    Interpretation of sections 89 to 94
Insurance companies
96    Companies with overseas branches: restriction of credit
97    Companies with more than one category of business: restriction of credit
98    Attribution for section 97 purposes if category is gross roll-up business
99    Allocation of expenses etc in calculations under section 35 of CTA 2009
100    First limitation for purposes of section 99(2)
101    Second limitation for purposes of section 99(2)
102    Interpreting sections 99 to 101 for life assurance or gross roll-up business
103    Interpreting sections 99 to 101 for other insurance business
104    Interpreting sections 100 and 101: amounts referable to category of business
Chapter 3
Miscellaneous provisions
Application of Part for capital gains tax purposes
105    Meaning of “chargeable gain”
106    Chapters 1 and 2 apply to capital gains tax separately from other taxes
Taxation (International and Other Provisions) Bill v
When foreign tax disregarded in applying Part for corporation tax purposes
107    Disregard of foreign tax referable to derivative contract
108    Disregard of foreign tax attributable to interest under a loan relationship
109    Repo cases in which no disregard under section 108
110    Stock-lending cases in which no disregard under section 108
Special rules for discretionary trusts
111    When payment to beneficiary treated as arising from foreign source
Deduction for foreign tax where no credit allowed
112    Deduction from income for foreign tax (instead of credit against UK tax)
113    Deduction from capital gain for foreign tax (instead of credit against UK tax)
114    Time limits for action if tax adjustment makes reduction too large or too small
115    Duty to give notice that adjustment has rendered reduction too large
European cross-border transfers of business
116    Introduction to section 117
117    Tax treated as chargeable in respect of transfer of loan relationship, derivative
contract or intangible fixed assets
European cross-border mergers
118    Introduction to section 119
119    Tax treated as chargeable in respect of transfer of loan relationship, derivative
contract or intangible fixed assets
Transparent entities involved in cross-border transfers and mergers
120    Introduction to section 121
121    Tax treated as chargeable in respect of relevant transactions
Cross-border transfers and mergers: chargeable gains
122    Tax treated as chargeable in respect of gains on transfer of non-UK business
Interpretation of sections related to the Mergers Directive
123    Interpretation of sections 116 to 122
Cases about being taxed otherwise than in accordance with double taxation arrangements
124    Giving effect to solutions to cases and mutual agreements resolving cases
125    Effect of, and deadline for, presenting a case
The Arbitration Convention
126    Meaning of “the Arbitration Convention”
127    Giving effect to agreements, decisions and opinions under the Convention
128    Disclosure under the Convention
Taxation (International and Other Provisions) Bill vi
Disclosure of information
129    Disclosure where relief given overseas for tax paid in the United Kingdom
Interpretation of double taxation arrangements
130    Interpreting provision about UK taxation of profits of foreign enterprises
131    Interpreting provision about interest influenced by special relationship
132    Interpreting provision about royalties influenced by special relationship
133    Special relationship rule for royalties: matters to be shown by taxpayer
Assessments
134    Correcting assessments where relief is available
Part 3
Double taxation relief for special withholding tax
Introductory
135    Relief under this Part: introductory
136    Interpretation of Part
Credit etc for special withholding tax
137    Income tax credit etc for special withholding tax
138    Amount and application of the deemed tax under section 137
139    Capital gains tax credit etc for special withholding tax
140    Provisions about the deemed tax under section 139
141    Credit under Chapter 2 of Part 2 to be allowed first
Calculation of income or gain on remittance basis where special withholding tax levied
142    Conditions for purposes of section 143
143    Taking account of special withholding tax in calculating income or gains
Certificates to avoid levy of special withholding tax
144    Issue of certificate
145    Refusal to issue certificate and appeal against refusal
Part 4
Transfer pricing
Chapter 1
Basic transfer-pricing rule
146    Application of this Part
147    Tax calculations to be based on arm’s length, not actual, provision
148    The “participation condition”
Taxation (International and Other Provisions) Bill vii
Chapter 2
Key interpretative provisions
Meaning of certain expressions that first appear in section 147
149    “Actual provision” and “affected persons”
150    “Transaction” and “series of transactions”
151    “Arm’s length provision”
152    Arm’s length provision where actual provision relates to securities
153    Arm’s length provision where security issued and guarantee given
154    Interpretation of sections 152 and 153
155    “Potential advantage” in relation to United Kingdom taxation
156    “Losses” and “profits”
“Direct participation” in management, control or capital of a person
157    Direct participation
“Indirect participation” in management, control or capital of a person
158    Indirect participation: defined by sections 159 to 162
159    Indirect participation: potential direct participant
160    Indirect participation: one of several major participants
161    Indirect participation: sections 148 and 175: financing cases
162    Indirect participation: sections 148 and 175: further financing cases
163    Meaning of “connected” in section 159
Application of OECD principles
164    Part to be interpreted in accordance with OECD principles
Chapter 3
Exemptions from basic rule
165    Exemption for dormant companies
166    Exemption for small and medium-sized enterprises
167    Small and medium-sized enterprises: exceptions from exemption
168    Medium-sized enterprises: exception from exemption: transfer pricing notice
169    Giving of transfer pricing notices
170    Appeals against transfer pricing notices
171    Tax returns where transfer pricing notice given
172    Meaning of “small enterprise” and “medium-sized enterprise”
173    Meaning of “qualifying territory” and “non-qualifying territory”
Chapter 4
Position, if only one affected person potentially advantaged, of other
affected person
Claim by affected person who is not advantaged
174    Claim by the affected person who is not potentially advantaged

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