The firm said the proposed legislation means that from 1 January investment companies operating in foreign companies will pay UK tax on the basis of the real economic results of their business.
Before the legislation companies had to pay an ‘artificial’ tax arising from ‘notional exchange differences which give them no cost or benefit,’ the firm said.
PwC tax partner, Derek Jenkins, said: ‘The position of the UK as a major international finance centre will be dramatically assisted by the new law. This change in the foreign exchange rules for investment companies is both welcome and overdue.
‘The old rules disadvantaged the UK as a centre for international trade and made multinational groups divert activities such as treasury operations to overseas locations.’
Jenkins added: ‘In the past foreign currency investment companies had either to face a tax liability wholly out of line with their economic result or enter into complex structuring to achieve tax neutrality, which diverted attention from their main commercial activities.’
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