Overseas tax - Chapter 8 - 10 - DTT Flashcards
What are the key WHT rates?
Dividends - 5% if holdings of 25% or more, 15% if less than 25% (0% UK)
Interest - 10% (20% UK)
Royalties - 0% (20% UK)
What article can be used to resolve TP disputes?
Article 25 - Mutual agreement procedure (MAP) can be used in resolving disputes arising in TP cases
What are the first set of rules relating to o/s PEs when s.18(A) election has not been made?
For rules to apply must have o/s sub and PE in the same territory and PE must have losses.
The loss must be relieved against the profits of the o/s sub.
Where this is the case, the foreign tax available for credit relief in the UK is reduced by the ‘relevant amount’. Where the ‘relevant amount’ is the reduction in the amount of o/s tax payable by the o/s sub.
What are the second set of rules relating to o/s PEs when s.18(A) election has not been made?
Unused credit relief may be carried forward or carried back up to 3 years.
Carry back is on a LIFO basis.
The time limit for a claim is 4 years.
What is the Underlying Tax (UT) formula?
What is the Gross UK Income calculation?
What is the Maximum Underlying Tax calculation?
When do the above calculations apply?
UT = Gross Dividend / Relevant Profits x Actual tax paid
Gross UK Income = Gross Dividend + UT
Maximum UT = Gross UK Income x 25%
This applies when non-exempt o/s dividends are received
What is S.18(A) CTA 2009?
- Exemption for o/s PEs profits to be taxable in the UK.
- Applies to all PEs of the company (Cannot pick and choose).
- Is irrevocable.
What is Total Opening Negative Amount (TONA)?
TONA is the net losses over the previous 6 years in an overseas PE.
Where a PE has a TONA and the election has been made, the profits will be taxable until the TONA has been matched aginst this.
What does it mean to stream losses?
A company can make a streaming election so that if they have multiple o/s PEs then the TONA will be matched against the chosen territory only.
The PE chosen must have it’s own TONA and anything in excess is unstreamed and will be matched across all PEs.
This election is irrevocable.
