|
| |
|
etc), after subsection (1) insert— |
| |
“(1A) | But this section does not apply if— |
| |
(a) | the manufactured overseas dividend is paid by a UK resident |
| |
company in the course of a trade carried on through a |
| |
permanent establishment in a territory outside the United |
| 5 |
| |
(b) | section 18A of CTA 2009 has effect in relation to the company |
| |
for the accounting period in which it is paid.” |
| |
23 (1) | Section 923 (foreign payers of manufactured overseas dividends: the reverse |
| |
charge) is amended as follows. |
| 10 |
(2) | After subsection (1) insert— |
| |
“(1A) | This section also applies if— |
| |
(a) | a UK resident company pays a manufactured overseas |
| |
dividend in the course of a trade carried on through a |
| |
permanent establishment in a territory outside the United |
| 15 |
| |
(b) | section 18A of CTA 2009 has effect in relation to the company |
| |
for the accounting period in which it is paid.” |
| |
(3) | After subsection (2) insert— |
| |
“(2A) | But this section does not apply if— |
| 20 |
(a) | the recipient is a UK resident company which receives the |
| |
manufactured overseas dividend for the purposes of a trade |
| |
carried on by the recipient through a permanent |
| |
establishment in a territory outside the United Kingdom, and |
| |
(b) | section 18A of CTA 2009 has effect in relation to the company |
| 25 |
for the accounting period in which it is received.” |
| |
(4) | In subsection (3), insert at the end “and section 922(1A) did not apply.” |
| |
| |
24 | TIOPA 2010 is amended as follows. |
| |
25 | In section 18 (entitlement to credit for foreign tax reduces UK tax by amount |
| 30 |
of credit), after subsection (3) insert— |
| |
“(3A) | References in subsection (3) to tax payable under the law of a |
| |
territory outside the United Kingdom do not include tax paid by a |
| |
company in relation to which an election under section 18A of CTA |
| |
2009 (exemption for profits or losses of overseas permanent |
| 35 |
establishments) has effect in respect of a relevant profits amount or |
| |
relevant losses amount within the meaning of that section.” |
| |
26 | For section 43 substitute— |
| |
“43 | Profits attributable to permanent establishments for purposes of |
| |
| 40 |
(1) | This section applies in determining for the purposes of section 42(2) |
| |
the amount of the profits of a UK resident company on which |
| |
corporation tax is or would be chargeable that is attributable to a |
| |
|
| |
|
| |
|
permanent establishment of the company in a territory outside the |
| |
| |
(2) | The amount of the profits of the company that is attributable to the |
| |
permanent establishment is the amount that the permanent |
| |
establishment would have made if it were a distinct and separate |
| 5 |
| |
(a) | engaged in the same or similar activities under the same or |
| |
| |
(b) | dealt wholly independently with the company. |
| |
(3) | In applying subsection (2) assume that— |
| 10 |
(a) | the permanent establishment has the same credit rating as the |
| |
| |
(b) | (subject to subsection (5)) the permanent establishment has |
| |
such equity and loan capital as it could reasonably be |
| |
expected to have if the equity and loan capital of the |
| 15 |
company were allocated in accordance with subsection (4). |
| |
(4) | The allocation is one made on a just and equitable basis between the |
| |
permanent establishments in territories outside the United Kingdom |
| |
through which the company carries on business and the entity that |
| |
the company would consist of if each such permanent establishment |
| 20 |
were an entity distinct and separate from the company. |
| |
(5) | If the permanent establishment is in a full treaty territory (within the |
| |
meaning of Chapter 3A of Part 2 of CTA 2009) subsection (3)(b) has |
| |
effect subject to the double taxation arrangements having effect in |
| |
relation to the territory. |
| 25 |
(6) | Subsections (3)(b) to (5) prevail over any allotment of equity or loan |
| |
capital to the permanent establishment made by the company. |
| |
(7) | If the company is an insurance company (within the meaning given |
| |
by section 431(2) of ICTA), in applying subsection (2) assume that the |
| |
permanent establishment has such free assets as it would have in the |
| 30 |
circumstances described in that subsection. |
| |
(8) | The Commissioners for Her Majesty’s Revenue and Customs may by |
| |
regulations make provision as to the meaning of “free assets” in |
| |
| |
27 (1) | Section 78 (meaning of “overseas permanent establishment”) is amended as |
| 35 |
| |
| |
(a) | in paragraph (a), for “and define the expression,” substitute “which |
| |
contain a relevant non-discrimination provision,”, and |
| |
| 40 |
(i) | for “but do not define the expression,” substitute “which do |
| |
not contain a relevant non-discrimination provision,”, and |
| |
(ii) | for “is to be read in accordance with Chapter 2 of Part 24 of |
| |
CTA 2010.” substitute “has the meaning given by the Model |
| |
Tax Convention on Income and on Capital published by the |
| 45 |
Organisation for Economic Co-operation and Development |
| |
in July 2010 (“the OECD”) or such other document published |
| |
|
| |
|
| |
|
by the OECD in place of it as is designated from time to time |
| |
by order made by the Treasury.” |
| |
(3) | After that subsection insert— |
| |
“(3) | In subsection (2) “relevant non-discrimination provision” means a |
| |
provision to the effect that the taxation on a permanent |
| 5 |
establishment of an enterprise of a state which is party to the |
| |
arrangements (a “contracting state”) is not to be less favourably |
| |
levied in any other contracting state than the taxation levied on |
| |
enterprises of that other contracting state carrying on the same |
| |
| 10 |
28 | In section 263 (tax treatment of financing costs and income: net debt of a |
| |
company), after subsection (4) insert— |
| |
“(4A) | For the purposes of subsections (3) and (4), if the company is one in |
| |
relation to which an election under section 18A of CTA 2009 has |
| |
effect anything that would otherwise form part of the company’s |
| 15 |
relevant liabilities or relevant assets does not do so if and to the |
| |
extent that amounts in respect of it are left out of account under that |
| |
| |
29 | After section 317 insert— |
| |
“317A | Companies with permanent establishments profits election |
| 20 |
(1) | This section applies if, apart from this section, an amount is a |
| |
financing expense amount or a financing income amount of a |
| |
company in relation to which an election under section 18A of CTA |
| |
| |
(2) | It is treated as not being a financing expense amount or a financing |
| 25 |
income amount of the company if and to the extent that it is left out |
| |
of account under that section.” |
| |
| |
Commencement and transitional provision |
| |
| 30 |
30 | The amendments made by this Schedule come into force on the day on |
| |
which this Act is passed. |
| |
Condition B of motive test |
| |
31 (1) | This paragraph applies in relation to a company carrying on business |
| |
through a permanent establishment in an accounting period which is the |
| 35 |
first relevant accounting period or an accounting period beginning less than |
| |
12 months after the beginning of the first relevant accounting period (an |
| |
“affected relevant accounting period”) if the company carried on the |
| |
business through the permanent establishment throughout the period of 12 |
| |
months ending with the day before that on which this Act is passed (“the |
| 40 |
| |
(2) | Condition B in section 18H of CTA 2009 (as inserted by this Schedule) is |
| |
assumed to be met in relation to an affected relevant accounting period if— |
| |
|
| |
|
| |
|
(a) | the gross income attributable to the permanent establishment for the |
| |
affected relevant accounting period does not exceed by more than |
| |
10% the gross income attributable to the permanent establishment |
| |
for the period of 12 months ending immediately before the beginning |
| |
of the first relevant accounting period (or, if the affected relevant |
| 5 |
accounting period is less than 12 months, such proportion of that |
| |
gross income as the length of the affected relevant accounting period |
| |
| |
(b) | there has been no major change in the nature or conduct of the |
| |
business carried on through the permanent establishment in the |
| 10 |
period (“the relevant period”) beginning with the pre- |
| |
commencement year and ending with the end of the affected |
| |
relevant accounting period, and |
| |
(c) | no asset attributable to the permanent establishment was previously |
| |
owned, and no part of the business carried on through the |
| 15 |
permanent establishment in the affected relevant accounting period |
| |
was previously carried on, by a company whose chargeable profits |
| |
and creditable tax (if any) for any accounting period ending within |
| |
the relevant period were (or, but for an agreement made or |
| |
undertaking given, would have been) apportioned under section |
| 20 |
| |
(3) | For the purposes of sub-paragraph (2) “major change in the nature or |
| |
conduct of the business” includes— |
| |
(a) | a major change in the type of property dealt in, or services or facilities |
| |
provided, in the business, and |
| 25 |
(b) | a major change in customers, outlets or markets of the business. |
| |
(4) | A reference in sub-paragraph (3) to a change includes a change which is |
| |
achieved gradually as a result of a series of transfers. |
| |
32 (1) | This paragraph applies in relation to a company (“company A”) carrying on |
| |
business through a permanent establishment in an accounting period which |
| 30 |
is the first relevant accounting period or an accounting period beginning less |
| |
than 12 months after the beginning of the first relevant accounting period |
| |
(an “affected relevant accounting period”) if a company which— |
| |
(a) | was a non-UK resident company, and |
| |
(b) | was controlled by company A, |
| 35 |
| (“company B”) carried on the business throughout the period of 12 months |
| |
ending with the day before that on which this Act is passed (“the pre- |
| |
| |
(2) | Condition B in section 18H of CTA 2009 (as inserted by this Schedule) is |
| |
assumed to be met in relation to an affected relevant accounting period if— |
| 40 |
(a) | the gross income attributable to the permanent establishment for the |
| |
affected relevant accounting period does not exceed by more than |
| |
10% the gross income of the business for the period of 12 months |
| |
ending immediately before the beginning of the first relevant |
| |
accounting period of the company (or, if the affected relevant |
| 45 |
accounting period is less than 12 months, such proportion of that |
| |
gross income as the length of the affected relevant accounting period |
| |
| |
(b) | there has been no major change in the nature or conduct of the |
| |
business carried on through the permanent establishment in the |
| 50 |
period (“the relevant period”) beginning with the pre- |
| |
|
| |
|
| |
|
commencement year and ending with the end of the affected |
| |
relevant accounting period, |
| |
(c) | company B was not a company whose chargeable profits and |
| |
creditable tax (if any) for any accounting period ending within the |
| |
relevant period were (or, but for an agreement made or undertaking |
| 5 |
given, would have been) apportioned under section 747(3) of ICTA, |
| |
| |
(d) | no asset attributable to the permanent establishment was previously |
| |
owned, and no part of the business carried on through the |
| |
permanent establishment in the affected relevant accounting period |
| 10 |
was previously carried on, by such a company. |
| |
(3) | Sub-paragraphs (3) and (4) of paragraph 31 apply for the purposes of sub- |
| |
| |
(4) | Section 1124 of CTA 2010 (meaning of “control”) applies for the purposes of |
| |
| 15 |
Large pre-commencement losses |
| |
33 (1) | This paragraph applies if— |
| |
(a) | there is a relevant losses amount exceeding £50 million in the case of |
| |
a company in relation to any relevant foreign territory for any |
| |
accounting period beginning within the period of 6 years ending |
| 20 |
with the day before that on which this Act is passed, and |
| |
(b) | (apart from this paragraph) the accounting period would not be an |
| |
affected prior accounting period for the purposes of section 18J(2) of |
| |
CTA 2009 (as inserted by this Schedule). |
| |
(2) | The accounting period, and every later accounting period of the company |
| 25 |
before the first relevant accounting period of the company which would not |
| |
otherwise be an affected prior accounting period for those purposes, is an |
| |
affected prior accounting period for those purposes. |
| |
| |
34 | For the purposes of section 62A of CAA 2001 (as inserted by this Schedule)— |
| 30 |
(a) | where the qualifying expenditure in respect of the plant or |
| |
machinery, or of the group of assets of which it forms part, in |
| |
question does not exceed £50 million, an accounting period ending |
| |
more than 12 months before the day on which this Act is passed is |
| |
not a relevant preceding accounting period, and |
| 35 |
(b) | where it does, any accounting period beginning within the period of |
| |
6 years ending with the day before that on which this Act is passed |
| |
which (apart from this paragraph) would not be a relevant preceding |
| |
accounting period is such a period. |
| |
Section 43(8) of TIOPA 2010: free assets |
| 40 |
35 | Until provision made under subsection (8) of section 43 of TIOPA 2010 (as |
| |
substituted by this Schedule) has effect, “free assets” in subsection (7) of that |
| |
section has the meaning given by regulation 3 of the Non-resident Insurance |
| |
Companies Regulations 2003 (S.I. 2003/2714). |
| |
|
| |
|