In October 2015 the UK Government published their proposals for new legislation to implement the recommendations of the OECD’s Base Erosion and Profit Shifting (“BEPS”) project.
Following a consultation process, the Government published a revised set of proposals on 12 May 2016. They have invited comments on the proposals by the deadline of 4 August 2016. It is expected that the Government will publish draft legislation following the 2016 Autumn Statement and then final legislation within Finance Bill 2017.
Although the aim of BEPS has been to target the multinational groups perceived as using cross-border tax structuring to reduce their taxable profits, the proposed UK law will, in principle, apply to all taxpayers. However, there is a de minimis group threshold of £2m net UK interest expense so, subject to other interest deductibility rules, the first £2m of interest payable will be treated as deductible.
Read more about the proposals and next steps in M&A Matters.
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