Government confirms review of rules governing tax on foreign branches
The government has promised to reform by 2012 the rules governing the taxation of multi-nationals’ foreign profits.
Today’s Budget document says that new CFC Controlled Foreign Company rules will be legislated on in spring 2012.
It says that the delay in introducing the legislation is designed to allow careful consideration of “how to make the rules more competitive, enhance long-term stability and provide adequate protection of the UK tax base”.
The ABI has pressed for wholesale reform of the CFC rules, which it says has spurred an exodus of UK insurers to overseas locations, by next year.
The Budget also says that interim improvements will be legislated in spring 2011 to make the current rules easier to operate and where possible increase competitiveness.
And it says the government will move to a more territorial basis for taxing the profits of foreign branches, consulting this summer 2010 on options for retaining foreign branch loss relief, with a view to reforming the rules in spring 2011.
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