The Paymaster General said, “I am pleased to announce the UK tax treaty programme for the year to 31st March 2001, and a projection of the work to be done in subsequent years. The top priority during the coming year is to continue our negotiations with the United States. Work on the treaty programme will ensure that our network of income tax treaties remains healthy and responsive to developments in the UK and abroad. These treaties are important for British business involved in cross-border trade and investment. I am also pleased to announce – for the first time on behalf of the Inland Revenue – the programme for work on Double Contribution Agreements. Although the DCA network is comparatively small, it is also important for British business as these treaties facilitate cross-border exchanges of personnel.”
This Press Release reports on progress in the year just ended and gives details of negotiating priorities for the coming year (to March 2001) and beyond.
Each year, the Government reviews the UK’s treaty priorities to make sure they meet the needs of the business community. As part of this exercise the Inland Revenue monitors the treaty networks of other countries and consults other Government departments, representative bodies and UK companies. This process of consultation is widely welcomed. The results, balanced with an estimate of the available resources, are used to produce a working plan for the year ahead.
Double Taxation Agreement (DTAs) and Double Contribution Agreements (DCAs) – Progress to March 2000
DTA Negotiations have been held in the last 12 months with South Africa and the United States.
During the same period, the House of Commons and the Privy Council have approved a comprehensive treaty with Kuwait.
We have continued to work towards finalising new DTAs with France, Norway and Lithuania.
During 1999/2000 a new DCA with Japan was signed, agreement was reached at official level on a new DCA with Slovakia and parliamentary procedures were completed in respect of a new DCA with Korea.
Double Taxation Agreement (DTAs)
Programme to March 2001 – and beyond
The top priority during the coming year will be the continuing negotiations with the United States.
We aim to complete the outstanding work on new treaties with France, Germany, Lithuania, Norway and South Africa. We intend to continue negotiations with Chile, Jordan, and Namibia – and hope to conclude at least some of these during the coming year. We also hope to finalise Protocols to the existing treaties with Canada and the Netherlands.
We also have plans for exploratory talks about new or updated treaties with Australia, Bahrain, Georgia, Guinea, Hong Kong, Iran, Qatar, Slovenia and Taiwan .
The work programme described above will continue into 2001/2002 – and we recognise that some parts of it may not begin in earnest before then. This reflects (a) the current concentration of our effort on the United States and (b) the reality that tax treaties are typically developed over a number of years.
Double Contribution Agreements (DCAs)
Programme to March 2001 The main priorities for the coming year are to bring the Japanese and Korean agreements into effect and to proceed to signature of a new DCA with Slovakia. We also hope to make progress on agreements under negotiation with Poland and Chile.
Representations on any of the above matters are invited and should be sent as soon as possible to:
Mrs Jas Sahni
London, WC2B 6ES
NOTES FOR EDITORS
1. Double taxation treaties aim to protect against the risk of a double tax burden, provide certainty of treatment for cross-border economic activity and prevent fiscal discrimination against UK business interests abroad. The business community has long welcomed such treaties as an essential part of the framework for international trade and plays an active part in the prioritisation of work in this area. Double taxation treaties also protect the Exchequer by including provisions to counter avoidance and evasion – not least by measures providing for the exchange of information between Revenue authorities.
2. There are more than 1,300 double taxation treaties worldwide – the United Kingdom has the largest network of treaties, covering over 100 countries. The United Kingdom has sought to encourage and maintain an international consensus on the appropriate tax treatment of cross border economic activity and thus promote international trade. The United Kingdom plays an important role in the Organisation for Economic Co-operation and Development in this field.
3. Double Contribution Agreements (DCAs) promote the free movement of labour and assist in maintaining the UK’s position as an attractive inward investment location. Among other things, DCAs provide that, where a worker is sent on detachment from one country to the other, he and his employer are liable to contribute only to the “home” country’s scheme – and they thus eliminate the liability to contribute simultaneously to the social security schemes of both countries.
4. The UK has 14 bilateral social security agreements in force which include contribution provisions. With effect from 1st April 1999, the Inland Revenue has taken over policy responsibility for DCAs from the Department of Social Security.