This is from the Budget report:
This is going to be fun.
For example, what's a low or no tax jurisdiction? The UK is going to create a tax haven list at last. Listen to the howls arising from St Helier, St Peter Port and Douglas, for a start.
And then note this will 'look through' intermediaries. Could 'Double Irish' and 'Dutch sandwiches' be in line for UK attention? That's going to be popular in Dublin and Amsterdam.
And in that case is this an admission that the Google or Diverted Profits Tax was an over complicated tool for something that could be done a lot more simply? Especially when, I note, the phrase 'apply this to to all payments connected with the activities of a business liable for tax in the UK'. Could this just be a statement of intent to apply the withholding to payments made by sales agents even if they do not settler a royalty? If so, this will be fun.
And, as a final note, why has it taken so long for the tax justice movement to be listened to on withholding when we have suggested it for so long?
I awaiting the wails not just offshore but all the way back to the States on this one.
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Debt cap is also abolished. So many crazy complicated rules getting ditched. Happy days. The 100k lifetime cap on ess is noteworthy but slipping under the radar. This will generate many millions for the treasury, trust me
You could take a look at the OECD Harmful Tax Competition Report for a better understanding of what no/low tax regimes and tax havens are.
What, from 1998?
Yes – it is part of BEPS Action 5. Come on, get with the programme!
That is not the report you were referring to
You referenced a 1998 report
You meant BEPS
Actually mean both – BEPS Action 5 uses the 1998 Harmful Tax Competition report as its basis. By and large the 1998 report is still relevant.
I beg to differ, having had some involvement in the issues
Have you read the report?
“Revamp the work on harmful tax practices with a priority on improving transparency, including compulsory spontaneous exchange on rulings related to preferential regimes, and on requiring substantial activity for any preferential regime.”
Of course I have
The details are here: https://www.gov.uk/government/publications/income-tax-royalty-withholding-tax
It has three parts.
An anti-avoidance rule to disapply a double tax treaty that prevents withholding where there are arrangements contrary to the object and purpose of the treaty. This is similar to a BEPS proposal although more limited in scope and pre-empts to an extent the outcome of the negotiation on the multilateral instrument.
A extension to the types of IP in respect of which royalties are subject to withholding.
Treating royalties from a UK PE as having a UK source.
So, no need to define “low or no tax” jurisdictions at all.
Dutch Sandwich and the Double Irish strucutres should be dealt with by the BEPS provisions on hybrids.
Could the reverse apply? That is, profits diverted to the UK from other countries and remain un-taxed?
Yes
So it’s plus ça change; french for ‘nowt changes’.
Personally I would have suspected that Google Ireland supplies a service to Google UK rather than supplying intellectual property. Why do you think this is a Google tax?
Because of what happens after Ireland
I don’t see how Google Ireland is caught by the legislation.
The UK company has to “make an intellectual property royalty payment”. There is an attempt to cover the situation where the UK company makes an “IP payment” indirectly via an unrelated company, but nothing to cover a situation where “the payer” makes a payment for services and the non-UK company makes intellectual property payments in the course of its business.
This strikes me as legislation aimed more at certain coffee chains or tax free town initiatives.
Maybe you have not noted what Google does