Overview

The Taxation (International and Other Provisions) Act 2010 is a UK law that clarifies and updates several areas of UK tax law, particularly concerning international taxation. It aims to simplify existing legislation and address tax avoidance schemes, while also restating and reorganizing various tax provisions.

Description

The Act covers several key areas:

Double Taxation Relief

The Act modifies rules for double taxation relief, which reduces tax burden on income or gains already taxed in another country. It includes provisions for double taxation agreements (DTAs) with other territories and unilateral relief arrangements in certain circumstances. The act sets out rules for calculating credits for foreign tax, including limits on the amount of credit allowable and anti-avoidance measures.

Transfer Pricing

The Act introduces rules on transfer pricing, which affects how multinational companies price transactions between their related entities. It aims to ensure these prices are at "arm's length," meaning what independent businesses would agree. The act provides exceptions for small and medium-sized enterprises and includes anti-avoidance measures.

Advance Pricing Agreements

It regulates advance pricing agreements (APAs) between HMRC and taxpayers, allowing for pre-agreed pricing of international transactions to reduce future tax disputes.

Tax Arbitrage

The act addresses tax arbitrage schemes, which aim to exploit differences in tax systems to gain an unfair advantage. It introduces notices that can adjust the calculation of income or tax liabilities to counter such schemes.

Tax Treatment of Financing Costs and Income

The Act introduces rules to limit deductions for financing expenses and to exempt certain financing income for multinational groups with significant UK debt, aiming to prevent tax avoidance through artificial financing structures.

Offshore Funds

It grants the Treasury power to make regulations regarding the tax treatment of participants in offshore funds.

Amendments and Relocations

The Act also relocates and rewrites provisions from various previous tax laws to improve clarity and organization.

Government Spending

The Act's impact on government spending is complex and depends on its effectiveness in preventing tax avoidance and on the specific outcomes of its various provisions. No specific figures were provided in the bill text.

Groups Affected

• Multinational companies: Affected by transfer pricing and advance pricing agreement rules, and tax treatment of financing costs and income provisions.
• Individuals with international income: Affected by the changes to double taxation relief.
• UK resident companies with overseas subsidiaries or branches: Affected by transfer pricing, double taxation relief, and tax treatment of financing costs and income.
• Offshore fund investors: Affected by regulations on the tax treatment of offshore funds.
• Companies involved in tax arbitrage: Subject to new anti-avoidance measures.
• Oil and gas companies: Subject to adjustments in oil activities provisions.

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