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16 MARCH 2016

Addressing hybrid mismatches

From 1 January 2017 multinational enterprises will be prevented

from avoiding tax through the use of certain cross-border

business structures for finance transactions.

Patent box

The operation of the patent box will be modified, with effect

from 1 July 2016, to comply with the OECD’s new rules. The lower

tax rate will be made dependent on, and proportional to, the

extent of R&D expenditure incurred by the company claiming the


Transfer pricing

The UK transfer pricing rules will be updated in line with the

revisions to the OECD Transfer Pricing Guidelines, so that

interpreting the application of the UK rules will be done by

reference to the revised Guidelines. The government will consult

on whether to introduce secondary adjustment rules into the

UK’s transfer pricing legislation to address the underlying cash

benefit from incorrect transfer pricing and encourage broader

compliance with the legislation.

Trading income received in non-monetary form

New legislation will ensure that trading receipts in non-monetary

form are brought into account for tax purposes at their full value.

Company distributions

As previously announced, the transactions in securities rules

will be amended and a targeted anti-avoidance rule will be

introduced to prevent income being converted to capital to gain

a tax advantage.

Asset managers’ performance-linked rewards

There will be new rules to determine when performance awards

received by asset managers may be taxed as capital gains. An

award will be subject to income tax unless the underlying fund

undertakes long term investment activity.

page 12

think ahead

Your business might be

entitled to a valuable

R&D tax credit – even if

it doesn’t make a taxable


Check out the

position; you might be

surprised what can qualify

and how much it could be

worth to you.