Government changes foreign profits tax proposals

The government has amended proposed changes to the rules governing taxation
of foreign profits in order to ‘simplify’ legislation

In a letter circulated by Stephen Timms, financial secretary to the Treasury,
last week, it was revealed that alterations to the debt cap element of the rules
will be added to the Finance Bill after consultation with business, according to

‘The legislation in the bill has been subject to extensive consultation over
the past year, and we have worked to ensure the responses are accommodated,
where possible, and the bill is as complete as it can be,’ wrote Timms.

The new measure will limit the UK tax deduction for UK members of a group
that have net finance expenses to the consolidated gross finance expenses of
that group.

There are also other areas that could be subject to further change following
more consultation, including the exclusion for financial services and the
targeted anti-avoidance rule.

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