TaxAdministrationRevenue’s intangible reform

Revenue's intangible reform

The Inland Revenue is expected to announce at the end of November the outcome of consultation into the taxation of intellectual property, goodwill and other intangible assets.

Comments were invited on the draft clauses and the partial regulatory impact assessment before the end of January.

The government published proposals for a comprehensive new regime for intangible assets at the time of the Budget last year. These proposals were developed after consultation with business and were designed to:

  • provide relief for the cost of acquiring intangible assets where none had previously been available;
  • give relief on a consistent basis, following the rate of amortisation used in companies’ accounts;
  • treat sales of intangibles consistently, with profits taxed as income but subject to a new roll-over relief for reinvestment in new intangibles; and
  • provide transitional arrangements that preserve expectations for companies’ existing intangible assets.

    The new approach has been welcomed by business and subject to consultation, the government will introduce it from 1 April.

    The intangibles reform will mark a further step in the government’s programme of corporate tax reform, set out in a consultation document on large business taxation. The government sees the key principles for reform as:

  • business competitiveness – to create the best possible location for investment by removing tax distortions and promoting productivity; and
  • fairness – ensuring that individual businesses pay their fair share of tax in relation to their commercial profits and compete on a level playing field.In addition to the intangibles reform, the government is:
  • introducing an exemption for capital gains and losses on disposals of companies’ substantial shareholdings;
  • introducing a modernised regime for the taxation of corporate debt, financial instruments and foreign exchange gains and losses;
  • consulting further on the design of an R&D tax credit for larger companies; and
  • consulting on proposals to reduce the compliance burden associated with the requirement to deduct tax at source on cross-border royalty payments.

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