Review of the Taxation of Foreign profits
30 April 2009
Please note that there is a separate webpage for the ongoing Controlled Foreign Companies reform. This can be accessed in related links.
If you would like to be informed when this area of the website is updated then please email Hannah Mitchell.
Finance Bill 2009
The Finance Bill has today been published and includes clauses for the foreign profits measures announced in the Budget. The link below is to a letter that has been issued by the Financial Secretary which gives some further information about the worldwide debt cap legislation.
Budget 2009 update
Budget 2009 confirmed the introduction from 1 July 2009 of an exemption for foreign dividends received by UK companies. This will be supported by a limited restriction to the interest deduction rules, which has been refined following discussions with business and will be introduced for accounting periods beginning on or after 1 January 2010. Furthermore, consequential changes to the controlled foreign companies (CFC) rules and replacement of the Treasury Consent rules with a post-transaction reporting requirement will be introduced from 1 July 2009.
Taxation of the foreign profits: Responses to the 2007 discussion document (16 December 2008)
Taxation of the foreign profits: Impact Assessment (December 2008)
The impact assessment for the proposed changes to taxation of foreign profits was announced at the Pre-Budget Report 2008.
Draft clauses, explanatory notes and policy overview statement (09 December 2008)
Draft clauses and other accompanying documents for the proposed changes to taxation of foreign profits was announced at the Pre-Budget Report 2008.
Pre-Budget Report 2008 announcement and open letter (24 November 2008)
In addition to the Pre-Budget Report 2008 announcement on foreign profits and CFC reform, the Government issued an open letter providing further information on next steps and the direction of travel for taxing foreign subsidiaries. The Government would be interested to hear from stakeholders on aspects of the evidence base in this area that they consider worth scrutiny.
Please send any responses or queries to Hannah Mitchell.
Stakeholder engagement (September 2008)
Following the commitment in the open letter and technical note issued in July 2008, HM Treasury discussed the review of the taxation of foreign profits with a number of stakeholders. This was to keep industry informed of progress made, whilst providing HM Treasury with the information and evidence needed to progress policy development. We met with interested stakeholders to discuss both:
As outlined in the July 2008 technical note the Government wanted to discuss the fiscal estimates and assumptions of dividend exemption with business as it believed this was an essential part of finding the right balanced package. In response to this HM Treasury held meetings with the following stakeholder groups: Big Four Accountancy Firms, CBI Tax Committee, 100 Group Tax Committee, and academics.
We also discussed with business possible policy options that could be introduced to help manage the fiscal risk of dividend exemption. In addition to discussing this with the representative bodies, meetings were held on the various policy strands being discussed as part of the review. Below are details of the membership of the various policy strands, including dates of meetings.
Dialogue with stakeholders is essential to achieving a successful outcome from the review of the taxation of foreign profits and we will continue to engage with stakeholders throughout this process.
Open letter and technical note (July 2008)
The Government issued an open letter and technical note on the review of the taxation of foreign profits.
Taxation of the foreign profits of companies: a discussion document (June 2007)
Budget 2007 announced a major set of reforms to modernise the domestic corporation tax base, marking a further milestone in the Government's objective to maintain a competitive tax system for business. Alongside domestic reform, the Government also committed to consult on reforming the taxation of foreign profits and in light of that published this discussion document.
Some of the documents are available in Adobe Acrobat Portable Document Format (PDF). If you do not have Adobe Acrobat installed on your computer you can download the software free of charge from the Adobe website. For alternative ways to read PDF documents and further information on website accessibility visit the HM Treasury accessibility page.
Foreign profits: presentations from London plenary events (July 2007)
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