Cautious welcome to draft tax rules for multinationals
KPMG is cautiously optimistic about the government's draft legislation on taxation of companies' foreign profits
Chris Morgan,
KPMG
head of international corporate tax, has described the government’s draft
legislaion on corporate taxation of foreign profits as ‘one of the most
significant changes we’ve seen in the corporate tax landscape’.
The draft legislation package includes, among others, an exemption for
foreign dividends for large and medium size groups; restriction on the
deductibility of interest expense claimed by UK members of a multinational
group; repeal of the Treasury Consent Rules; and extension of an existing
anti-avoidance rule.
‘It marks a decisive shift towards a territorial tax system where the UK only
taxes profits made in the UK. Such a change is essential if the UK is to have a
modern, competitive tax regime,’ Morgan said.
‘However the key element is still missing. This is reform of the controlled
foreign companies rules under which profits from overseas subsidiaries of
UK-resident parents may be taxed in the UK as they arise. The CFC rules are one
of the main reasons for a number of companies having migrated from the UK this
year.’
Further reading:
Advisers await foreign profits plans in PBR
Foreign tax change put on hold