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TAXATION (INTERNATIONAL AND OTHER PROVISIONS) ACT 2010

UK Public General Acts

Version 01/04/2010

2010 CHAPTER 8

Default Geographical Extent: E+W+S+N.I.


  • Part 1. Overview
  • Part 2. Double taxation relief
    • CHAPTER 1. Double taxation arrangements and unilateral relief arrangements
      • Double taxation arrangements
      • Unilateral relief arrangements
    • CHAPTER 2. Double taxation relief by way of credit
      • Effect to be given to credit for foreign tax allowed against UK tax
      • Interpretation of Chapter
      • Credits where same income charged to income tax in more than one tax year
      • Cases in which credit not allowed
      • Exceptions to requirement to be UK resident
      • Calculating income or gains in respect of which credit is allowed
      • Limits on credit: general rules
      • Limit on, and reduction of, credit against income tax
      • Limit on credit against capital gains tax
      • Limit on total credit against income tax and capital gains tax
      • Limit on credit against corporation tax
      • Calculating tax for purposes of section 42(2)
      • Allocation of deductions etc to profits for purposes of section 42
      • Taking account of foreign tax underlying dividends
      • Taking account of tax underlying dividends that is not foreign tax
      • Tax underlying dividend treated as underlying tax paid by dividend's recipient
      • Tax underlying dividends: restriction of relief, and particular cases
      • Unrelieved foreign tax on profits of overseas permanent establishment
      • Action after adjustment of amount payable by way of UK or foreign tax
      • Schemes and arrangements designed to increase relief: anti-avoidance
      • Insurance companies
    • CHAPTER 3. Miscellaneous provisions
      • Application of Part for capital gains tax purposes
      • When foreign tax disregarded in applying Part for corporation tax purposes
      • Special rules for discretionary trusts
      • Deduction for foreign tax where no credit allowed
      • European cross-border transfers of business
      • European cross-border mergers
      • Transparent entities involved in cross-border transfers and mergers
      • Cross-border transfers and mergers: chargeable gains
      • Interpretation of sections related to the Mergers Directive
      • Cases about being taxed otherwise than in accordance with double taxation arrangements
      • The Arbitration Convention
      • Disclosure of information
      • Interpretation of double taxation arrangements
      • Assessments
  • Part 3. Double taxation relief for special withholding tax
    • Introductory
    • Credit etc for special withholding tax
    • Calculation of income or gain on remittance basis where special withholding tax levied
    • Certificates to avoid levy of special withholding tax
  • Part 4. Transfer pricing
    • CHAPTER 1. Basic transfer-pricing rule
    • CHAPTER 2. Key interpretative provisions
      • Meaning of certain expressions that first appear in section 147
      • “Direct participation” in management, control or capital of a person
      • “Indirect participation” in management, control or capital of a person
      • Application of OECD principles
    • CHAPTER 3. Exemptions from basic rule
    • CHAPTER 4. Position, if only one affected person potentially advantaged, of other affected person
      • Claim by affected person who is not advantaged
      • Claims: special cases
      • Alternative way of claiming if a security is involved
      • Notification to persons who may be disadvantaged
      • Treatment of interest where claim made
      • Adjustment of double taxation relief where claim made
      • Interpretation of Chapter
    • CHAPTER 5. Position of guarantor of affected person's liabilities under a security issued by the person
    • CHAPTER 6. Balancing payments
    • CHAPTER 7. Oil-related ring-fence trades
    • CHAPTER 8. Supplementary provisions and interpretation of Part
      • Unit trusts
      • Determinations requiring Commissioners' sanction
      • Appeals
      • Effect of Part on capital allowances and chargeable gains
      • Adjustments
      • Definitions
  • Part 5. Advance pricing agreements
  • Part 6. Tax arbitrage
    • Introduction
    • Deduction notices
    • Deduction schemes
    • Consequences of deduction notices
    • Receipt notices
    • General provisions about deduction notices and receipt notices
    • Interpretation
  • Part 7. Tax treatment of financing costs and income
    • CHAPTER 1. Introduction
    • CHAPTER 2. Application of Part
    • CHAPTER 3. Disallowance of deductions
    • CHAPTER 4. Exemption of financing income
    • CHAPTER 5. Intra-group financing income where payer denied deduction
    • CHAPTER 6. Tax avoidance
    • CHAPTER 7. “Financing expense amount” and “financing income amount”
    • CHAPTER 8. “Tested expense amount” and “tested income amount”
    • CHAPTER 9. “Available amount”
    • CHAPTER 10. Other interpretative provisions
  • Part 8. Offshore funds
    • Tax treatment of participants in offshore funds
    • Supplementary
  • Part 9. Amendments to relocate provisions of tax legislation
  • Part 10. General provisions
    • Subordinate legislation
    • Interpretation
    • Final provisions
  • Version 01/04/2010
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  • Version 18/03/2010

Introductory Text

Taxation (International and Other Provisions) Act 2010

2010 CHAPTER 8

An Act to restate, with minor changes, certain enactments relating to tax; to make provision for purposes connected with the restatement of enactments by other tax law rewrite Acts; and for connected purposes.

[18th March 2010]

Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

Part 1
Overview



1 Overview of Act

(1) The following Parts contain provisions relating to international aspects of taxation—

(a) Parts 2 and 3 (double taxation relief) ,
(b) Parts 4 and 5 (transfer pricing and advance pricing agreements) ,
(c) Part 6 (tax arbitrage) ,
(d) Part 7 (tax treatment of financing costs and income) , and
(e) Part 8 (offshore funds).
(2) Part 9 contains amendments of tax legislation to relocate enactments to appropriate places.

(3) In particular, Part 9 contains amendments of TCGA 1992, ITTOIA 2005 and ITA 2007 that insert provisions relating to—

(a) oil activities (see section 364 and Schedule 1) ,
(b) alternative finance arrangements (see section 365 and Schedule 2) ,
(c) leasing arrangements involving finance leases or loans (see section 367 and Schedule 3) ,
(d) sale and lease-back etc (see section 368 and Schedule 4) ,
(e) factoring of income etc (see section 369 and Schedule 5) , and
(f) UK representatives of non-UK residents (see section 370 and Schedule 6).
(4) Part 10 contains provisions of general application (including definitions for the purposes of the Act).

(5) For abbreviations used in this Act see section 373, and for defined expressions used in Parts 2 to 8 see Schedule 11.

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

(1) If Her Majesty by Order in Council declares—

(a) that arrangements specified in the Order have been made in relation to any territory outside the United Kingdom with a view to affording relief from double taxation in relation to taxes within subsection (3) , and
(b) that it is expedient that those arrangements should have effect,
those arrangements have effect.
(2) If arrangements have effect under subsection (1) , they have effect in accordance with section 6.

(3) The taxes are—

(a) income tax,
(b) corporation tax,
(c) capital gains tax,
(d) petroleum revenue tax, and
(e) any taxes imposed by the law of the territory that are of a similar character to taxes within paragraphs (a) to (d).
(4) In this Part “double taxation arrangements” means arrangements that have effect under subsection (1).

3 Arrangements may include retrospective or supplementary provision

(1) Section 2(1) gives effect to arrangements even if the arrangements include—

(a) provision for relief from tax for periods before the passing of this Act, or
(b) provision for relief from tax for periods before the making of the arrangements.
(2) Section 2(1) gives effect to arrangements even if the arrangements include—

(a) provision as to income that is not subject to double taxation,
(b) provision as to chargeable gains that are not subject to double taxation, or
(c) provision as to foreign-field consideration that is not subject to double taxation.
(3) In subsection (2) (c) “foreign-field consideration” means consideration brought into charge to tax under section 12 of the Oil Taxation Act 1983 (charge to petroleum revenue tax on consideration in respect of United Kingdom use of a foreign field asset).

4 Meaning of “double taxation” in sections 2 and 3

(1) For the purposes of sections 2 and 3, any amount within subsection (2) is to be treated as having been payable.

(2) An amount is within this subsection if it is an amount of tax that would have been payable under the law of a territory outside the United Kingdom but for a relief—

(a) given under the law of the territory with a view to promoting industrial, commercial, scientific, educational or other development in a territory outside the United Kingdom, and
(b) about which provision is made in double taxation arrangements.
(3) References in sections 2 and 3 to double taxation are to be read in accordance with subsection (1).

5 Orders under section 2: contents and procedure

(1) If an Order under section 2 (“the later Order”) revokes an earlier Order under that section, the later Order may contain transitional provisions that appear to Her Majesty to be necessary or expedient.

(2) An Order under section 2 is not to be submitted to Her Majesty in Council unless a draft of the Order has been laid before and approved by a resolution of the House of Commons.

6 The effect given by section 2 to double taxation arrangements

(1) Subject to this Part and Part 18 of ICTA, double taxation arrangements have effect in accordance with subsections (2) to (4) despite anything in any enactment.

(2) Double taxation arrangements have effect in relation to income tax and corporation tax so far as the arrangements provide—

(a) for relief from income tax or corporation tax,
(b) for taxing income of non-UK resident persons that arises from sources in the United Kingdom,
(c) for taxing chargeable gains accruing to non-UK resident persons on the disposal of assets in the United Kingdom,
(d) for determining the income or chargeable gains to be attributed to non-UK resident persons,
(e) for determining the income or chargeable gains to be attributed to agencies, branches or establishments in the United Kingdom of non-UK resident persons,
(f) for determining the income or chargeable gains to be attributed to UK resident persons who have special relationships with non-UK resident persons, or
(g) for conferring on non-UK resident persons the right to a tax credit under section 397(1) of ITTOIA 2005 in respect of qualifying distributions made to them by UK resident companies.
(3) Double taxation arrangements have effect in relation to capital gains tax so far as the arrangements provide—

(a) for relief from capital gains tax,
(b) for taxing capital gains accruing to non-UK resident persons on the disposal of assets in the United Kingdom,
(c) for determining the capital gains to be attributed to non-UK resident persons,
(d) for determining the capital gains to be attributed to agencies, branches or establishments in the United Kingdom of non-UK resident persons, or
(e) for determining the capital gains to be attributed to UK resident persons who have special relationships with non-UK resident persons.
(4) Double taxation arrangements have effect in relation to petroleum revenue tax so far as the arrangements provide for relief from petroleum revenue tax charged under section 12 of the Oil Taxation Act 1983 (charge to petroleum revenue tax on consideration in respect of United Kingdom use of a foreign field asset).

(5) In the case of relief under this Chapter that is not also relief under Chapter 2, the relief is not available in respect of special withholding tax (a corresponding rule applies in relation to relief under Chapter 2 as a result of the definition of foreign tax given by section 21).

(6) Relief under subsection (2) (a) , (3) (a) or (4) requires a claim.

(7) In subsection (3) “UK resident person” and “non-UK resident person” have the meaning given by section 989 of ITA 2007.

(8) In subsection (5) “special withholding tax” has the same meaning as in Part 3 (see section 136).

7 General regulations

(1) The Commissioners for Her Majesty's Revenue and Customs may make regulations generally for carrying out the provisions of the treaty sections or any double taxation arrangements.

(2) Regulations under subsection (1) may in particular provide for securing that relief from taxation imposed by the law of the territory to which any double taxation arrangements relate does not enure for the benefit of persons not entitled to that relief.

(3) Subsection (4) applies to tax if—

(a) the tax is deductible from a payment but, in order to comply with double taxation arrangements, has not been deducted, and
(b) it is discovered that the arrangements did not apply to that payment.
(4) Regulations under subsection (1) may in particular provide for authorising recovery of tax to which this subsection applies—

(a) by assessment on the person entitled to the payment from which the tax is not deducted, or
(b) by deduction from subsequent payments.
(5) In subsection (1) “the treaty sections” means— sections 2 to 6, section 134(1) , and section 134(3) to (6) so far as relating to section 134(1).

(6) This section does not apply in relation to—

(a) petroleum revenue tax, or
(b) taxes imposed by the law of a territory outside the United Kingdom that—
(i) are of a similar character to petroleum revenue tax, and
(ii) are not of a similar character to income tax, corporation tax or capital gains tax.

Unilateral relief arrangements


8 Interpretation: “unilateral relief arrangements” means rules 1 to 9, etc

(1) In this Part “unilateral relief arrangements”, in relation to a territory outside the United Kingdom, means the rules set out in sections 9 to 17.

(2) In sections 11 to 17, and in Chapter 2 (except section 29) in its application to relief under unilateral relief arrangements, references to tax payable or paid under the law of a territory outside the United Kingdom include only—

(a) taxes which are charged on income and which correspond to income tax,
(b) taxes which are charged on income or chargeable gains and which correspond to corporation tax, and
(c) taxes which are charged on capital gains and which correspond to capital gains tax.
(3) For the purposes of subsection (2) , tax may correspond to income tax, corporation tax or capital gains tax even though it—

(a) is payable under the law of a province, state or other part of a country, or
(b) is levied by or on behalf of a municipality or other local body.

9 Rule 1: the unilateral entitlement to credit for non-UK tax

(1) Credit for tax—

(a) paid under the law of the territory,
(b) calculated by reference to income arising, or any chargeable gain accruing, in the territory, and
(c) corresponding to UK tax,
is to be allowed against any income tax or corporation tax calculated by reference to that income or gain.
(2) Credit for tax—

(a) paid under the law of the territory,
(b) calculated by reference to any capital gain accruing in the territory, and
(c) corresponding to UK tax,
is to be allowed against any capital gains tax calculated by reference to that gain.
(3) For the purposes of subsection (1) , profits from, or remuneration for, personal or professional services performed in the territory are to be treated as income arising in the territory.

(4) For the purposes of subsection (1) (c) , tax corresponds to UK tax if—

(a) it is charged on income and corresponds to income tax, or
(b) it is charged on income or chargeable gains and corresponds to corporation tax.
(5) For the purposes of subsection (2) (c) , tax corresponds to UK tax if it is charged on capital gains and corresponds to capital gains tax.

(6) For the purposes of subsections (4) and (5) , tax may correspond to income tax, corporation tax or capital gains tax even though it—

(a) is payable under the law of a province, state or other part of a country, or
(b) is levied by or on behalf of a municipality or other local body.
(7) If the territory is the Isle of Man or any of the Channel Islands, subsections (1) (b) and (2) (b) have effect with the omission of “in the territory”.

(8) Subsections (1) and (2) are subject to sections 11 and 12.