Further amendment to Finance Bill
The chancellor has tabled another amendment to the Finance Bill, this time to the Schedule 22 tonnage tax provisions.
The amendment covers foreign dividends, which may only come into tonnage tax if they are paid out of profits that are subject to tax.
This year’s Finance Bill contains a new optional ring-fenced regime which allows companies to elect to have taxable profits from shipping activities calculated by reference to the tonnage of qualifying ships, instead of by reference to commercial profits.
Although the tonnage tax regime already contains a number of provisions to protect against abuse, under the current proposals dividends from foreign companies may come within the tonnage tax regime, regardless of whether or not the profits from which those dividends emanate have been taxed.
The government claims it does not want to allow the possibility it could be used as a tax-efficient route for repatriating money from countries that do not tax shipping activities. This amendment removes this possibility.