Global Tax Adviser, January 12, 2016. Ronan Carrig GTA, Canadian Corporate Tax. The UK released draft legislation for consultation on December 9, 2015 for its forthcoming 2016 Finance Bill. However, draft legislation for certain key measures that had previously been announced is still pending.
Among the provisions are 48 pages of draft clauses dealing with the new hybrid rules that were introduced following the recommendations of the OECD's base erosion and profit shifting (BEPS) project, specifically Action 2. These rules prevent a tax deduction in the UK for a cross-border payment when that payment is not subject to the relevant foreign tax. The clauses also cover situations where there is a double deduction for the same payment. On December 22, 2015, the UK released a number of draft examples illustrating these new rules.
Also included in the draft legislation are measures introducing new rules for the UK Patent Box regime that will apply to new entrants and new intellectual property (IP). The rules incorporate the "nexus approach" set out in Action 5 of the OECD BEPS project restricting the benefits available from the regime to the proportional research and development the company itself has undertaken in developing the qualifying IP right.
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