UK Worldwide Debt Cap

Size: px
Start display at page:

Download "UK Worldwide Debt Cap"

Transcription

1 Revised UK Tax Rules on the Deductibility of Interest and other Financing Costs SUMMARY From a date expected sometime in 2009, the UK will be introducing significant additional restrictions on the ability of UK-taxpaying companies to deduct interest in respect of certain borrowings from their affiliates. These new rules are part of the trade-off for the on-going reform of the UK controlled foreign company ( CFC ) rules, as well as the introduction of the proposed UK corporate tax exemption for certain UK and non-uk dividends. This proposed exemption was discussed in an earlier client memorandum dated January 8, It is important to note three things about the proposed restrictions: a) They do not just apply to those UK-taxpaying companies which take advantage of the new exemption for dividends. They can apply to any UK-taxpaying company and they seek to ensure that the cost of leverage borne by UK members of the worldwide group, via intra-group debt, is not excessive relative to the worldwide group s net external leverage (after excluding external borrowings by UK-taxpaying companies). Anyone contemplating a debt-funded acquisition of assets via the UK needs to consider these rules very closely. b) The UK has stopped short of introducing the kind of restrictive interest allocation rules with which US taxpayers will be familiar. However, the changes represent a significant addition to the UK corporation tax compliance burden, made more complex by the need to draft the rules so that fundamental freedoms under EC law are respected. Attempts have been made to limit the impact of these rules on financial institutions but the safe harbours in question are not particularly broad. c) These new rules are in addition to existing restrictions on UK interest deductibility (notably, the UK thin capitalisation rules and the expanded interest anti-abuse rules published in draft in December 2008 and which are discussed in another Sullivan & Cromwell LLP client memorandum). New York Washington, D.C. Los Angeles Palo Alto London Paris Frankfurt Tokyo Hong Kong Beijing Melbourne Sydney

2 THE COMPANIES TO WHICH THE NEW CAP ON WORLDWIDE INTRA-GROUP FINANCING COSTS IS TO APPLY 1. The new rules apply to any group of entities (not just companies) which is large ; and which contains one or more relevant group companies. That group may or may not comprise exclusively UK entities. Such a group is defined as the worldwide group. A relevant group company is one which is subject to UK corporation tax and which is either the ultimate corporate parent of the worldwide group; or a relevant subsidiary of that ultimate corporate parent. These concepts are discussed further below. The restriction only applies to a company which is either UK-resident or carrying on a UK trade through a permanent establishment. In short, only companies subject to UK corporation tax are subject to the restriction. It is possible for non-uk-resident companies to be subject to UK income tax (not corporation tax) if, in particular, they own UK real estate from which they derive rental income. Furthermore, that income tax can be reduced by off-setting interest and other costs. Companies subject to UK income tax on this basis will not be caught by these new rules in their current form. 2. Returning to the definitions referred to earlier, the ultimate corporate parent of a worldwide group is any body corporate which belongs to the group but is not a direct or indirect subsidiary of another body corporate. For these purposes, a body corporate does not include the UK government or any foreign sovereign power (which could include certain sovereign wealth funds) but a body corporate could include certain limited partnerships. A relevant subsidiary of an ultimate corporate parent is a company which falls within any of (a) to (c) below: a) A 75% subsidiary of the ultimate corporate parent. This test is based on beneficial ownership of the company s issued share capital, measured by nominal value, not voting rights. b) The ultimate parent company is beneficially entitled to at least 75% of any distributable profits/liquidation surplus available to equity holders of the relevant company. This test depends on detailed technical concepts, more fully set out in Schedule 18 Income and Corporation Taxes Act 1988 ( ICTA ). In essence, it focuses on the percentage entitlements of stakeholders (other than creditors and preference shareholders) to distributable profits or liquidation surplus of the company. c) A company which is a party to a scheme, the main purpose, or one of the main purposes, of which is to secure that it is not a relevant subsidiary for these purposes. This category targets attempts to make companies fail artificially the tests in a) and b) above. 3. International accounting standards will define concepts such as entity, group, parent and subsidiary. Likewise, references to financial statements of the worldwide group usually mean the consolidated financial statements of the ultimate corporate parent and its subsidiaries prepared in accordance with international accounting standards or, where no such statements are prepared, those which would have been prepared if international accounting standards had been applied. Apparently, a list of approved local GAAPs is being considered to reduce the compliance burden of those groups (e.g. US and Japanese groups) which do not apply international accounting standards. -2-

3 4. There is a limited exemption from these new rules for a worldwide group which is not large. A group cannot be large if any member is a micro, small or medium-sized enterprise, as defined in the Annex to EC Commission Recommendation 2003/361/EC. This exemption is very unlikely to apply to any multinational group. THE TESTED AMOUNT 1. This key concept encompasses the deductions at risk of being denied. It requires the calculation, for each period of account of a worldwide group, of the intra-group financing expense of each relevant group company within that group. The legislation targets the expenditure of each such company in respect of borrowings, and other financing arrangements, with other members of the worldwide group, including other UK group members. In particular, the legislation will target upstream loans to UK-taxpaying members of the group from non-uk affiliates. In the past, these have been a favoured method for tax-free profit repatriation. In principle, financing expenses of a UK corporation tax payer which are owed to persons outside the worldwide group are ignored, although there is an exception which is discussed later. 2. The draft legislation defines the intra-group financing expense of a relevant group company by reference to four categories, A-D, subject to important exceptions which are discussed in the next section. 3. Category A covers debits and credits in respect of loan relationships of the relevant company where those loan relationships are group debtor relationships; i.e. loan relationships where the relevant UKtaxpaying company is the debtor; and another member of the worldwide group is the creditor. 4. Category B encompasses the debits and credits of the relevant UK taxpaying company in respect of derivative contracts (e.g., swaps) where there is a hedging relationship between the derivative in question and the company s group debtor relationship(s) (as defined in 3.). For these purposes, a hedging relationship is defined in the UK derivative contracts legislation. Provided that this hedging relationship exists, it is not relevant that the derivative contract is with an unrelated third party. 5. The third category, C, is the total amount that would be brought into account for the purposes of corporation tax by the relevant group company in respect of the financing cost element of payments to other members of the worldwide group under a finance lease of plant and machinery. On the assumption that a finance lease is, in economic terms, a form of lending, this makes sense. Finance lease is not defined. Presumably, the final legislation will define it by reference to international accounting standards. The UK tax authorities ( HMRC ) appear to have chosen not to extend Category C to cover the financing element of rentals under longer-term operating leases. Arguably, the reference to leases of plant and machinery is over-broad. It could, in particular, include long leases of commercial buildings which will include plant and machinery in the form of fixtures. It -3-

4 would be unfortunate if a portion of the rent payable in respect of occupational leases of commercial buildings could fall within this new legislation on the basis that it was attributable to the fixtures content of the relevant building. It would be sensible if leases of background plant and machinery (e.g., escalators, lifts, etc.,) in a commercial building, were ignored for Category C purposes. 6. Category D is the financing cost, if any, that would otherwise be brought into account for tax purposes by the relevant UK company in respect of debt factoring or any similar transaction entered into by it with other members of the worldwide group. This category seems wide. Moreover, the published guidance on the draft legislation indicates that the four categories may be expanded to include the economic equivalent of borrowing via derivative contracts (at the moment only derivative contracts which hedge group debtor relationships are included). Also, further consideration is being given to whether the legislation properly covers borrowing costs implicit in repos and stocklending. 7. Generally, the calculation of the tested amount does not deal adequately with relevant group companies which are non-uk-resident but carry on a trade through a UK permanent establishment. At present, the tested amount covers all the intra-group indebtedness, etc., of such a company whereas it should only cover that element of it which is attributable to the UK permanent establishment. TESTED AMOUNT : AMOUNTS TO BE DISREGARDED 1. There are a number of exclusions from the tested amount for items arising in respect of financial services business, which would otherwise fall within Categories A to D. a) The first exclusion applies where (i) the relevant group company is party to intra-group finance arrangements in the course of activities forming an integral part of a lending business of that company ; and (ii) at least 75% of the gross trading income of that lending business comes from lending to entities outside the worldwide group. Lending activities include, in particular, accepting deposits, the lending of money, factoring, finance leasing, providing guarantees and money transmission services. Gross trading income is income earned from such lending activities and accounted for as such under generally accepted accounting practice (i.e. UK GAAP or IAS), before any deduction for expenses, etc. b) There is a similar but narrower exclusion, for items within Categories A and B only, where the relevant group company is a regulated insurance company and one of two conditions is met. The first is that the company is party to the intra-group finance arrangement in the course of activities forming an integral part of a general insurance business of that company. The second condition is that the company is party to the intra-group finance arrangement in the course of activities forming an integral part of an insurance business other than general insurance; and that intra-group finance arrangement consists of investment acquisition debt. A regulated insurance company is one which is authorised in its territory of incorporation to carry on insurance business. General insurance business has the same meaning as in the official Handbook of the UK Financial Services Authority, the UK financial services regulator. Investment acquisition debt is debt requiring repayment less than one year after it is incurred, by the relevant group company to acquire assets of its long-term life assurance fund. -4-

5 c) The third exclusion is also for items within Categories A and B only. It applies where the relevant group company is party to the intra-group finance arrangement in the course of activities forming an integral part of a financial instrument dealing business. Such a business consists of active dealing in financial instruments, which are broadly defined in the Handbook of the UK Financial Services Authority. 2. The three exclusions in 1. all have a common purpose of limiting the impact of the new interest deductibility restrictions on financial services businesses. However, the exclusions will not apply to all the intra-group borrowings of a company carrying on lending/insurance/financial instrument dealing business in the UK. In particular, activities forming an integral part of a lending business will not extend to any intra-group debt incurred for activities related to, but not forming part of, that lending business e.g., borrowings to finance the acquisition of another bank. Therefore, businesses seeking to take advantage of these exclusions will need to segregate intra-group borrowings into those which do and do not form an integral part of their lending/insurance/financial instrument dealing business. This represents a significant compliance burden. Furthermore, while the 75% of gross trading income limb of the banking exclusion in 1(a) is designed to deny group treasury companies that exclusion, its practical impact may be much wider. 3. There are further exclusions from the interest deductibility restrictions for intra-group debt funding which constitutes regulatory capital. a) The first such exclusion applies to an intra-group finance arrangement which is a capital instrument where the UK Financial Services Authority requires the relevant group company to maintain capital resources at not less than a specified level; and that company uses this instrument to meet that obligation. If such capital instruments make up an unreasonable part of the capital resources of the company, the disregard of these arrangements can be restricted. Limited guidance has been provided about what unreasonable means in this context. b) There is a further exclusion where the relevant group company (defined as the holding company ) does not carry on a trade itself but onlends to one or more regulated subsidiaries at least 90% of the amount borrowed by it under an intra-group finance arrangement. A subsidiary for these purposes means a 75% subsidiary of the holding company. If, and to the extent that any of these subsidiaries can disregard its borrowings from the holding company on the basis that they are capital instruments, then the holding company too can disregard its intragroup finance arrangements which, effectively, fund its on-loans to the regulated subsidiaries. Further rules fine-tune the precise amount of the holding company s debits and credits which can be disregarded in this way, so that the disregard is limited to the amount actually on-lent by the holding company. TESTED AMOUNT : WHEN EXTERNAL FINANCE CAN BE TREATED AS INTRA- GROUP FINANCE 1. In principle, the new rules only apply to intra-group borrowings, not third-party borrowings, of a relevant group company. However, there are anti-avoidance rules to catch relevant schemes involving a relevant group company, another member of the worldwide group, and at least one third party where one of the main purposes of the relevant scheme is to reduce the tested amount from what it would otherwise be by incurring a third-party financial liability. -5-

6 2. In such cases, finance costs incurred in respect of the third-party financial liability are taken into account in computing Categories A, C and D of the tested amount. There are exceptions to this antiavoidance rule, some of which are still to be clarified by regulation. Firstly, external finance is not to be brought into account in this way where the relevant group company is party to a guarantee related to the third-party financial liability and it is reasonable to assume that the third-party financial liability would have been entered into even without the guarantee; or the main purpose of the guarantee is simply to reduce the cost of the third-party liability. In other words, the exception seeks to protect normal cross-guarantees of external finance. 3. Furthermore, these anti-avoidance rules do not apply where the relevant group company is a party to the relevant scheme in the ordinary course of a trade carried on by the relevant group company ; or where the relevant group company is taking part in a cash pooling arrangement. Regulations will set out what a cash pooling arrangement is and when a company participates in it. The part of the second exception relating to the ordinary course of trade seems to be targeted at certain letter of credit arrangements involving external banks which are part and parcel of financing international trade. The words in the ordinary course of trade are fairly narrow, quite apart from the fact that the concept of trade does not include investment business. 4. Generally, it is essential that this anti-avoidance rule is applied with a light touch. The exclusion of external finance costs from the tested amount is a cornerstone of the new rules. To erode it would create serious asymmetries, especially bearing in mind that the tested amount is a gross amount which ignores external finance income of relevant group members. THE AVAILABLE AMOUNT 1. The available amount is the other key concept. It is the ceiling which determines the extent of the disallowance of the tested amount. It is important to note that the available amount for the worldwide group is a net amount: namely, the non-uk external finance expense of that group for the relevant period less its worldwide external finance income for that period. This reflects the fact that the aim of the legislation is to ensure that the intra-group finance expense of UK-taxpaying companies within the worldwide group does not exceed that group s net external finance expense, ignoring third-party financial liabilities of UK-taxpaying companies. 2. In computing this ceiling, only non-uk external finance expense is taken into account but all external finance income (including external finance income of UK-taxpaying group members) is taken into account. Consequently, UK external finance income (e.g., interest on deposits with a third-party bank) is problematic because it does not reduce the tested amount but will reduce the available amount. This is one of the reasons why the exclusions (see above) from the tested amount for certain financial services businesses are so important. The reason why only non-uk external finance -6-

7 expense is taken into account is because, in principle, the tested amount does not catch third-party financial liabilities of UK-taxpaying members of the group. Taxpayers would therefore get a double benefit if such liabilities were also reflected in the available amount. 3. Whereas the tested amount is computed by reference to UK tax concepts, the available amount is determined by reference to the consolidated GAAP accounts of the worldwide group. The two methodologies do not necessarily coincide. In particular, it appears that foreign exchange movements in respect of the principal element of financial liabilities incurred by relevant group companies constitutes financing expense for the purposes of computing the tested amount. This is unfortunate and will hopefully be remedied in subsequent drafts of the legislation. By contrast, the available amount is broadly determined by reference to International Accounting Standard 22 ( IAS 22 ) which ought to disregard foreign exchange movements in respect of the principal amount of financing assets or liabilities. 4. The worldwide external finance expense of the group is the total amount disclosed in its IAS consolidated financial statements in respect of, notably, interest, discounts and premia in relation to borrowings; costs relating to financial instruments where they hedge borrowings; the implicit financing costs in finance leases of plant and machinery ; and financing costs relating to debt factoring. Power is reserved to add to this list in regulations. As indicated in 3., the worldwide external finance expense will also include an adjustment to any of these amounts in respect of foreign exchange movements. Worldwide external finance expense does not include dividends on redeemable preference shares which are treated as a liability in the group s IAS consolidated balance sheet. It should also not include deductions in respect of impairment, IAS 39 derecognition or fair value adjustments. HMRC are considering a rule to prevent intra-group finance expense being reclassified as worldwide external finance expense by interposing third-parties, e.g., under a back-to-back loan. 5. In computing the non-uk external finance expense, the UK external finance expense of the worldwide group must of course be subtracted: see 1. This is that part of the worldwide external finance expense which is reflected in the solus financial statements of UK tax-paying members of the worldwide group (including, in HMRC s view, any UK members which are not relevant group companies). As noted before, this will not include those non-uk-resident companies which pay income tax (notably, non-uk-resident landlords). As in relation to the tested amount, where a company carries on a trade through a UK permanent establishment, then the entirety of its financing expenses are potentially taken into account, rather than just those which are properly attributable to its UK permanent establishment. This appears to be a drafting error. 6. The amounts falling within the worldwide external finance income of the group are, in essence, receipts corresponding to the categories (listed in 4.) of worldwide external finance expense. Again, there is scope for these categories to be expanded by regulations. Dividend income in respect of -7-

8 redeemable preference shares which are recognised as an asset in the group s balance sheet are disregarded. 7. The available amount includes amounts disclosed in the group s consolidated financial statements in respect of a joint venture that is a member of the group. 8. Further rules may be introduced to adjust the available amount where the worldwide group borrows externally in a strong currency (e.g., Yen) but then onlends to its UK members in Sterling. Even if the relevant amounts of Yen and Sterling debt are the same, the disparity between Yen and (higher) Sterling interest rates will tend to push down the available amount, and hence the level of allowable UK tax deductions, if there is no adjustment of the kind proposed. THE AVAILABLE AMOUNT : AMOUNTS TO BE DISREGARDED 1. In calculating the available amount, there are exclusions for financial services businesses and their regulatory capital which are comparable, although not identical, to those which apply when computing the tested amount. Without these exclusions, the available amount in respect of worldwide groups conducting profitable financial services business could well be significantly reduced. 2. When calculating the group s non-uk external finance expense and its worldwide external finance income, an amount disclosed in its financial statements must, in particular, be disregarded if: a) that amount relates to activities of a group member that form an integral part of a lending business and b) if the amount in question is an expense, that member is not a UK corporation tax payer; and c) at least 75% of the gross trading income of the relevant lending business is derived from lending activities with entities outside the group. Lending activities means accepting deposits, lending money, recourse or non-recourse factoring, finance leasing, issuing and administering means of payment (e.g., letters of credit), providing guarantees, and money transmission services. Gross trading income of a lending business is income from such lending activities accounted for as such under generally accepted accounting practice, before any other deductions. The 75% of gross trading income test is designed to exclude group treasury activity from this exception but it may well have a wider impact. 3. In computing the group s non-uk external finance expense, an amount disclosed in the group s financial statements must also be disregarded if it relates to liabilities incurred by a group member that is a regulated insurance company for the purposes of that company s insurance business. For these purposes, a regulated insurance company is one which is authorised to carry on insurance business in its territory of incorporation. When computing the group s worldwide external finance income, an amount disclosed in its consolidated financial statements must be ignored if it relates to -8-

9 assets of a group member which is a regulated insurance company where those assets are acquired in the course of investment activities which are an integral part of an insurance business of that company. This exclusion is therefore quite narrow. 4. In computing the available amount, items in the group s financial statements must also be ignored if: a) they relate to activities of a group member that form an integral part of a financial instrument dealing business of that member; and b) if the amount in question is an expense, that member is not a UK corporation tax payer. For these purposes, a financial instrument dealing business is one which includes trading in such instruments. A financial instrument is anything defined as such by the UK Financial Services Authority. 5. In calculating non-uk external finance expense and worldwide external finance income of the worldwide group, certain amounts disclosed in the group financial statements relating to regulatory capital must also be disregarded. The amounts in question must relate to hybrid or innovative instruments as defined in the Basel II Accord on Capital Adequacy. Furthermore, a member of the worldwide group must be required to maintain regulatory capital, in keeping with that Accord, and must use the hybrid or innovative instrument in order to maintain that capital requirement. 6. In addition, an amount disclosed in the group financial statements (the external finance amount) must be disregarded in certain cases if: a) a member of the group that is not subject to a regulatory capital requirement is a party to a relevant debt arrangement to which the external finance amount relates; and b) that group member on-lends at least 90% of that debt to other group members covered by the exclusion for hybrid and innovative instruments (see 5. above) applies. For these purposes, a relevant debt arrangement is any debt incurred with a creditor outside the worldwide group, together with any derivative contract which hedges that debt. This exclusion for intra-group onlending to regulated entities is similar to the equivalent exclusion in calculating the tested amount. However, because it relates to non-uk arrangements, it is phrased in terms of the Basel II Accord on international capital adequacy, rather than by reference to the UK financial services legislation. Where this exclusion applies, further rules fine-tune the amount disregarded in this way, so that the disregard is limited to the amount actually on-lent by the holding company. DISALLOWANCE OF DEDUCTIONS 1. Where the tested amount exceeds the available amount, the excess is non-deductible and is referred to as the total disallowed amount. UK corporation-tax paying members of the worldwide group must -9-

10 make a special return to HMRC within 12 months of the end of the relevant period showing, in particular, the tested amount for that period, the available amount and the total disallowed amount. The return must be signed on behalf of all those UK-taxpaying companies. It must be signed by each corporation tax-paying company within the group even if it was only such a company for part of the relevant period. Therefore, in the context of company acquisitions and disposals, mechanisms must be put in place for ensuring that companies entering or exiting the worldwide group can still be required to complete and sign such a return where necessary. 2. A special return is not a corporation tax self-assessment return. However, it will affect the content of the corporation tax self-assessment return of relevant group members. In particular, a special return must identify the types of intra-group financing expense (see the discussion of the tested amount) attributable to each corporation tax-paying member of the group and must then specify how much, if any, of these amounts is to be disallowed for tax purposes. The benefit of filing a special return, is that it gives the group flexibility in allocating the total disallowed amount within the group. Without such a return, the total disallowed amount is allocated on a simple pro rata basis across the intragroup financing expense of each group company which is subject to UK corporation tax. 3. There is no basis for carrying forward the total disallowed amount to later accounting periods where there is excess available amount in existence. Equally, there is no scope for carrying forward to a later period excess available amount from an earlier period. In this respect, the draft UK rules are more restrictive than the US earnings stripping rules. EXEMPTIONS FOR INTRA-GROUP FINANCING INCOME 1. The legislation contains two limited exemptions from UK tax on intra-group financing income earned by a UK corporation tax-paying member of the worldwide group where interest expense of any such member has been disallowed. The aggregate amount exempted in this way cannot exceed the total disallowed amount. 2. One of the exemptions covers intra-group finance income received by a UK corporation tax-paying member from another such member. The second exemption relates to intra- group finance income received by a UK corporation tax-paying member from another company which is not a UK corporation tax payer but which is a 75% subsidiary of the same ultimate group parent or is itself that ultimate corporate parent. The overall amount eligible for exemption may be allocated flexibly among the UK corporation-tax paying members of the worldwide group, provided that they file a special return setting out the desired allocation. If no such return is filed, then the legislation imposes a more rigid allocation formula. 3. These exemptions are complex. Much of the complexity seems to arise because the legislation capping interest deductions applies not just in cross-border scenarios but also in purely UK domestic -10-

11 situations (i.e. intra-group debt between UK corporation tax payers). Defining the scope of the legislation in this way presumably avoids concerns that EU freedoms have been infringed by these rules. The first exemption for intra-group financing income seems designed to ensure that there is a UK tax-neutral result overall for the group when the legislation denies deductions in a purely UK domestic context. This does not alter the fact that the legislation may end up shifting taxable profit between UK tax-paying group members, and can lead to situations where interest deductions of a company become stranded because that company has no taxable income against which to set them. 4. These exemptions can also lead to income being exempted in ways which one would not expect. For example, suppose that a UK parent company is funded with 100 of equity and 100 of third-party debt carrying 5% interest. The 100 of debt is placed on deposit with an unrelated bank at 5%. The 100 of equity is used to fund an interest-bearing loan at 5% to a UK subsidiary which then makes an on-loan of 100 at 5% to a French sub-subsidiary. The French company places the money on deposit with an unrelated bank at 5%. In this rather basic example, the available amount is zero and therefore interest paid on the loan to the UK subsidiary is in principle disallowed as a deduction, because that interest is the tested amount. However, the UK parent can claim an exemption up to the amount of the interest which it receives on that on-loan. The UK subsidiary can also claim an exemption up to the amount of the interest which it receives from the French sub-subsidiary. However, the aggregate of the two exemptions cannot exceed the interest disallowance at the level of the UK subsidiary. The overall result is therefore that while the UK subsidiary loses its intra-group interest deduction, an equivalent amount of interest income can be exempted at the level of the UK subsidiary itself and/or its UK parent. A special return must be filed if the group wants maximum flexibility to allocate this exemption. Furthermore, while the income earned on the deposit held by the French sub-subsidiary is presumably taxable in France, there is also presumably a French interest deduction on the loan to the French sub-subsidiary. In short, there is no net French tax liability but the interest paid to the UK subsidiary from the French sub-subsidiary is in principle exempt (see above). By contrast, if the UK subsidiary had not on-lent to the French sub-subsidiary but had itself placed the same amount on deposit with an unrelated bank at 5%, then there would have been no exemption available to the UK subsidiary. 5. One final point needs to be borne in mind, given the relative novelty of the worldwide debt cap. If the UK disallows an interest deduction in respect of an intra-group debt and the creditor is non-ukresident, there is no guarantee that the latter's home jurisdiction will give relief corresponding to the disallowed deduction. There may therefore be a material risk of economic double taxation. It is far -11-

12 from clear that either the UK's double tax treaties or the EC Arbitration Convention provide an effective solution to this problem, e.g. via the competent authority procedure. OTHER ISSUES It is expected that the legislation will be further refined during the first half of In particular: 1. Further regime - specific rules have just been published to deal with interest expense and income in relation to activities subject to the UK s special North Sea corporation tax regime; interest expense and income of UK REITs; and interest expense and income connected with the elective UK tonnage tax regime for shipping. Such income and expense attributable to these special taxing regimes is ignored in the attributable amount, and the tested amount. Special rules are also expected to be published for UK securitisation vehicles. 2. An exclusion is anticipated which will cover cases where a group temporarily holds large cash reserves following a disposal. 3. A gateway is being considered to enable companies to conclude easily whether the new rules affect them without having to apply the rules in detail. It will not be simple to construct a gateway which is EU-law compliant. 4. As currently drafted, the rules will take effect prospectively from a date expected to fall in There will be no grandfathering for intra-group debt of relevant group members in existence at that date. * * * Copyright Sullivan & Cromwell LLP

13 ABOUT SULLIVAN & CROMWELL LLP Sullivan & Cromwell LLP is a global law firm that advises on major domestic and cross-border M&A, finance and corporate transactions, significant litigation and corporate investigations, and complex regulatory, tax and estate planning matters. Founded in 1879, Sullivan & Cromwell LLP has more than 700 lawyers on four continents, with four offices in the U.S., including its headquarters in New York, three offices in Europe, two in Australia and three in Asia. CONTACTING SULLIVAN & CROMWELL LLP This publication is provided by Sullivan & Cromwell LLP as a service to clients and colleagues. The information contained in this publication should not be construed as legal advice. Questions regarding the matters discussed in this publication may be directed to any of our lawyers listed below, or to any other Sullivan & Cromwell LLP lawyer with whom you have consulted in the past on similar matters. If you have not received this publication directly from us, you may obtain a copy of any past or future related publications from Jennifer Rish ( ; or Alison Alifano ( ; in our New York office. CONTACTS London Michael T. McGowan Andrew Howard Emma Hardwick-Panks LONDON:

Bank Levies in the UK, France and Germany

Bank Levies in the UK, France and Germany Bank Levies in the UK, France and Germany A Comparison of the New Levies on Banks SUMMARY The United Kingdom, France and Germany have all recently finalised, or are in the process of finalising, details

More information

Partnership Debt-for-Equity Exchanges

Partnership Debt-for-Equity Exchanges IRS Issues Final Regulations on Cancellation of Indebtedness Income and Other Consequences of an Exchange of Partnership Debt for Partnership Equity SUMMARY The Internal Revenue Service (the IRS ) recently

More information

Reform of Taxation of Foreign Profits. The Worldwide Debt Cap. July 2009. Osborne Clarke

Reform of Taxation of Foreign Profits. The Worldwide Debt Cap. July 2009. Osborne Clarke Reform of Taxation of Foreign Profits The Worldwide Debt Cap July 2009 Taxation of Foreign Profits Taxation of Foreign Profits Proposals It has been confirmed that certain elements of the taxation of foreign

More information

Recent Developments Regarding Entity Classification for UK Tax Purposes

Recent Developments Regarding Entity Classification for UK Tax Purposes Recent Developments Regarding Entity Classification for UK Tax Purposes Anson v. HMRC is a Delaware LLC tax-transparent? SUMMARY The question as to whether a non-uk entity such as a Delaware limited liability

More information

The FTT will be due irrespective of whether the acquisition is carried out by a company or an individual.

The FTT will be due irrespective of whether the acquisition is carried out by a company or an individual. French Parliament Adopts Proposed Legislation on Financial Transaction Tax with Few Amendments SUMMARY Draft legislation to introduce a financial transaction tax (the FTT ) in France was presented by the

More information

The world-wide debt cap a fundamental change to the tax deductibility of finance costs in the UK

The world-wide debt cap a fundamental change to the tax deductibility of finance costs in the UK The world-wide debt cap a fundamental change to the tax deductibility of finance costs in the UK Since 2007, HM Revenue & Customs ( HMRC ) has been consulting with business on reforms to the taxation of

More information

IRS Addresses Consequences of Purchasing and Selling Life Insurance Contracts

IRS Addresses Consequences of Purchasing and Selling Life Insurance Contracts IRS Addresses Consequences of Purchasing and Selling Life Insurance Contracts Revenue Rulings Provide Guidance to Policyholders Who Surrender or Sell Life Insurance Contracts and to Investors Who Purchase

More information

Reporting Requirements for Foreign Financial Accounts

Reporting Requirements for Foreign Financial Accounts Reporting Requirements for Foreign Financial Accounts Proposed FinCEN Regulations and IRS Guidance On Foreign Bank and Financial Account Reporting SUMMARY On February 26, the IRS issued Notice 2010-23

More information

IRS Issues Audit Directive on Worthless Debt Deductions for Banks and Bank Affiliates

IRS Issues Audit Directive on Worthless Debt Deductions for Banks and Bank Affiliates October 29, 2014 IRS Issues Audit Directive on Worthless Debt Deductions for Banks and Bank Affiliates LBI Directs Its Auditors Not to Challenge Certain Worthless Debt Deductions SUMMARY The Large Business

More information

Appendix 3. The metric

Appendix 3. The metric Appendix 3 A consistent and useful effective tax rate methodology to assess the global tax performance of multinationals in relation to Australian-linked business operations 1 The purpose of this paper

More information

Worldwide debt cap. The Bad bit of Foreign Profits 10 July 2009 Bill Dodwell

Worldwide debt cap. The Bad bit of Foreign Profits 10 July 2009 Bill Dodwell Worldwide debt cap. The Bad bit of Foreign Profits 10 July 2009 Bill Dodwell Debt Cap WW debt cap - introduction Timeline Overall concept What s in the Finance Bill? Next steps Trailed at PBR2006 and Budget2007,

More information

New York State Tax Developments

New York State Tax Developments New York State Executive Budget Proposal Would Make Important Changes to Tax Laws Affecting Individuals and Trusts SUMMARY On January 19, 2010, New York State Governor David A. Paterson released his executive

More information

New United Kingdom Tax on Cross-Border Tax Planning: Diverted Profits Tax

New United Kingdom Tax on Cross-Border Tax Planning: Diverted Profits Tax UK CLIENT MEMORANDUM ENGLISH LAW UPDATES New United Kingdom Tax on Cross-Border Tax Planning: Diverted Profits Tax 5 February 2015 AUTHOR Judith Harger Introduction Following heated press coverage and

More information

Registered Adviser Custody Rules

Registered Adviser Custody Rules SEC Adopts Final Rules and Issues Guidance to Safeguard the Custody of Client Assets by Investment Advisers SUMMARY The SEC has adopted and published amendments to Rule 206(4)-2 under the Investment Advisers

More information

Draft Examples Clause 33: Hybrid and other mismatches

Draft Examples Clause 33: Hybrid and other mismatches Draft Examples Clause 33: Hybrid and other mismatches The following draft examples are provided to assist understanding of the application of the draft hybrids mismatch legislation published on 9 December

More information

The UK as a holding company location

The UK as a holding company location The UK as a holding company location Tax May 2013 kpmg.com A key ambition is to create the most competitive tax system in the G20. As well as lowering tax rates, the Government wants to make the UK the

More information

FDIC Temporary Liquidity Guarantee Program

FDIC Temporary Liquidity Guarantee Program FDIC Temporary Liquidity Guarantee Program The FDIC Issues Interim Rule Regarding Temporary Liquidity Guarantee Program SUMMARY On Thursday, October 23, the Federal Deposit Insurance Corporation ( FDIC

More information

Holding companies in Ireland

Holding companies in Ireland Holding companies in Irel David Lawless Paul Moloney Dillon Eustace, Dublin Irel has long been a destination of choice for holding companies because of its low corporation tax rate of 12.5 percent, participation

More information

What Are the Tax Reasons Favouring the United Kingdom as a Holding Company Location for International Groups?

What Are the Tax Reasons Favouring the United Kingdom as a Holding Company Location for International Groups? UK CLIENT MEMORANDUM ENGLISH LAW UPDATES What Are the Tax Reasons Favouring the United Kingdom as a Holding Company Location May 13, 2014 AUTHOR Judith Harger Recent activity in the merger and M&A space

More information

EU State Aid and Tax Law

EU State Aid and Tax Law European Court finds that Spanish tax rules were not unlawful state aid because they did not give a selective advantage SUMMARY In two recent cases on fiscal state aid, the General Court of the European

More information

IRS Offshore Voluntary Disclosure Program

IRS Offshore Voluntary Disclosure Program IRS Launches Third Offshore Voluntary Disclosure Program SUMMARY On January 9, 2012, the Internal Revenue Service (the IRS ) issued a news release announcing that the IRS is opening a third Offshore Voluntary

More information

Partnership Tax Audits

Partnership Tax Audits New Audit Regime Allows IRS to Assess and Collect Tax at the Partnership Level SUMMARY The Bipartisan Budget Act of 2015 (the Budget Act) replaces the current partnership audit procedures with a very different

More information

Changes to New York Power of Attorney Law

Changes to New York Power of Attorney Law New York Amends Power of Attorney Law Retroactively SUMMARY The New York Legislature has now passed, and the Governor has signed, amendments to the New York Power of Attorney Law, Sections 5-1501 5-1514

More information

UK corporation tax on dividends

UK corporation tax on dividends October 2009 slaughter and may UK corporation tax on dividends Graham Airs, Partner The rules for the taxation of dividends received by UK resident companies (and, in those few cases where relevant, non-uk

More information

UK Real Estate Investment Trusts

UK Real Estate Investment Trusts Property Group 2006 UK Real Estate Investment Trusts By Ian Nisse & Iain Scoon In December 2005, the UK Government finally announced that it would bring forward legislation for the introduction of Real

More information

UK Tax Flash. Foreign Profits Update. Contents. Background

UK Tax Flash. Foreign Profits Update. Contents. Background UK Tax Flash. Foreign Profits Update The eagerly anticipated draft legislation outlining a new regime for the taxation of foreign profits was published on 9 December 2008. A summary of the provisions is

More information

CFTC Chairman Seeks Additional Authority for CFTC

CFTC Chairman Seeks Additional Authority for CFTC CFTC Chairman Seeks Additional Authority for CFTC Chairman Gensler Requests Clarifying Language for CFTC Regulatory Authority Under the Over-the-Counter Derivatives Markets Act of 2009 SUMMARY In response

More information

Court Addresses Employee Stock Option Expenses for Transfer Pricing Purposes

Court Addresses Employee Stock Option Expenses for Transfer Pricing Purposes Court Addresses Employee Stock Option Expenses for Transfer Pricing Purposes Ninth Circuit Overturns Tax Court and Holds That Expenses Attributable to Employee Stock Options Are Costs of Developing Intangibles

More information

House Financial Services Draft OTC Derivatives Legislative Proposal

House Financial Services Draft OTC Derivatives Legislative Proposal House Financial Services Draft OTC Derivatives Legislative Proposal House Financial Services Chairman Barney Frank Releases Discussion Draft of the Over-the-Counter Derivatives Markets Act of 2009, on

More information

Whistleblower Provisions

Whistleblower Provisions SEC Issues Final Rules Implementing the Dodd-Frank Whistleblower Provisions SUMMARY On May 25, 2011, the Securities and Exchange Commission voted 3 to 2 to approve the final rules implementing the whistleblower

More information

15. 2. 2. 2. Is Section 10d of the Corporate Income Tax Act consistent with Article 9 of the OECD Model Tax Convention?

15. 2. 2. 2. Is Section 10d of the Corporate Income Tax Act consistent with Article 9 of the OECD Model Tax Convention? CHAPTER 15. SUMMARY AND CONCLUSIONS 15. 1. Introduction The main question addressed in this PhD thesis is whether the restrictions placed by Dutch law on deducting interest for corporate income tax purposes

More information

Court Addresses (Again!) Employee Stock Option Expenses for Transfer Pricing Purposes

Court Addresses (Again!) Employee Stock Option Expenses for Transfer Pricing Purposes Court Addresses (Again!) Employee Stock Option Expenses for Transfer Pricing Purposes Ninth Circuit Reverses Itself and Holds that the Arm s-length Standard Controls in Determining if Employee Stock Option

More information

Details of proposed UK bank levy published: the UK and international context

Details of proposed UK bank levy published: the UK and international context TAX CLIENT PUBLICATION 30 July 2010... Details of proposed UK bank levy published: the UK and international context... Introduction On 13 July 2010, the UK Treasury published a Consultation Document on

More information

Newsletter UK Tax Update 2009

Newsletter UK Tax Update 2009 May 2009 Ernst & Young Shinnihon Tax JAPAN Newsletter UK Tax Update 2009 Contents 1. Dividend exemption 2. Worldwide Debt Cap ( WWDC ) 3. Tax and Risk Management The UK Government has recently published

More information

Current Market Conditions Create Opportunities for Estate Planning Strategies

Current Market Conditions Create Opportunities for Estate Planning Strategies Current Market Conditions Create Opportunities for Strategies SUMMARY The recent decline in stock prices and today s low interest rates for intra-family loans present a unique opportunity to transfer wealth

More information

Taxation of loan relationships

Taxation of loan relationships Taxation of loan relationships Produced by Tolley in partnership with Sue Mainwaring Reed Elsevier (UK) Limited trading as LexisNexis. Registered office 1-3 Strand London WC2N 5JR Registered in England

More information

TAXATION OF INTEREST, DIVIDENDS AND CAPITAL GAINS IN CYPRUS

TAXATION OF INTEREST, DIVIDENDS AND CAPITAL GAINS IN CYPRUS TAXATION OF INTEREST, DIVIDENDS AND CAPITAL GAINS IN CYPRUS LAWS AND DECREES The Income Tax (Amendment) Law of 2005 The Special Contribution for Defence (Amendment) Law of 2004 The Assessment and Collection

More information

Diverted Profits Tax: Guidance

Diverted Profits Tax: Guidance Diverted Profits Tax: Guidance This document updates the interim guidance (published in March 2015) on the Diverted Profits Tax that was introduced in the Finance Act 2015. It replaces all previously published

More information

tes for Guidance Taxes Consolidation Act 1997 Finance Act 2014 Edition - Part 13

tes for Guidance Taxes Consolidation Act 1997 Finance Act 2014 Edition - Part 13 Part 13 Close companies CHAPTER 1 Interpretation and general 430 Meaning of close company 431 Certain companies with quoted shares not to be close companies 432 Meaning of associated company and control

More information

Cross Border Tax Issues

Cross Border Tax Issues Cross Border Tax Issues By Reinhold G. Krahn December 2000 This is a general overview of the subject matter and should not be relied upon as legal advice or opinion. For specific legal advice on the information

More information

Belgium in international tax planning

Belgium in international tax planning Belgium in international tax planning Presented by Bernard Peeters and Mieke Van Zandweghe, tax division at Tiberghien Belgium has improved its tax climate considerably in recent years. This may be illustrated

More information

Internal Revenue Service Issues Regulations Affecting REIT Conversions and Spinoffs

Internal Revenue Service Issues Regulations Affecting REIT Conversions and Spinoffs Internal Revenue Service Issues Regulations Affecting REIT Conversions and Spinoffs IRS and Treasury Issue Regulations to Extend the Period During Which a REIT Is Subject to Corporate Tax on Built-in Gains

More information

French 50% Withholding Tax on Interest Paid in Tax Havens

French 50% Withholding Tax on Interest Paid in Tax Havens French 50% Withholding Tax on Interest Paid in Tax Havens Administrative Guidelines Provide for Safe Harbors under Which Interest Paid with Respect to Certain Notes Would Be Exempt SUMMARY Interest paid

More information

New York Employment Law Update

New York Employment Law Update Recent Legislative Developments in New York State Regarding Reductions in Force and Criminal Conviction Records SUMMARY A number of new New York State statutes of significance to employers will soon become

More information

New York State Labor Law Amendments Affecting Proof in Pay Discrimination Cases and Employer Policies Concerning Wage Disclosure

New York State Labor Law Amendments Affecting Proof in Pay Discrimination Cases and Employer Policies Concerning Wage Disclosure New York State Labor Law Amendments Affecting Proof in Pay Discrimination Cases and Employer Policies Concerning Wage Disclosure Amendments Alter Burden of Proof in Gender-Based Pay Cases and Bar Employer

More information

FEDERAL TAXATION OF INTERNATIONAL TRANSACTIONS

FEDERAL TAXATION OF INTERNATIONAL TRANSACTIONS Chapter 10 FEDERAL TAXATION OF INTERNATIONAL TRANSACTIONS Daniel Cassidy 1 10.1 INTRODUCTION Foreign companies with U.S. business transactions face various layers of taxation. These include income, sales,

More information

CYPRUS TAX CONSIDERATIONS

CYPRUS TAX CONSIDERATIONS TAXATION The following summary of material Cyprus, US federal income and United Kingdom tax consequences of ownership of the GDRs is based upon laws, regulations, decrees, rulings, income tax conventions

More information

PAPER IIA UNITED KINGDOM OPTION

PAPER IIA UNITED KINGDOM OPTION THE ADVANCED DIPLOMA IN INTERNATIONAL TAXATION June 2008 PAPER IIA UNITED KINGDOM OPTION ADVANCED INTERNATIONAL TAXATION TIME ALLOWED 3¼ HOURS You should answer FOUR out of the seven questions. Each question

More information

CIOT Examination: Advisory Advanced Corporation Tax

CIOT Examination: Advisory Advanced Corporation Tax CIOT Examination: Advisory Advanced Corporation Tax QUESTION 1: Note Prepared by: Tax Manager Subject: Group Relief This file note sets out the position on the availability of group relief from the Albinoni

More information

USA Taxation. 3.1 Taxation of funds. Taxation of regulated investment companies: income tax

USA Taxation. 3.1 Taxation of funds. Taxation of regulated investment companies: income tax USA Taxation FUNDS AND FUND MANAGEMENT 2010 3.1 Taxation of funds Taxation of regulated investment companies: income tax Investment companies in the United States (US) are structured either as openend

More information

Broker-Dealer Audit and Reporting Updates

Broker-Dealer Audit and Reporting Updates PCAOB Report and New SEC Rules Address Audit, Financial Reporting, Internal Control and Risk Management Issues Relating to Broker-Dealers These Developments May Be Relevant for Audit Committees of Public

More information

Changes to New York Power of Attorney Law

Changes to New York Power of Attorney Law Changes to New York Power of Attorney Law New York Imposes New Requirements on All Powers of Attorney Executed in New York by Individuals Effective September 1, 2009 SUMMARY Effective September 1, 2009,

More information

Mexico Mergers and acquisitions involving Mexican assets

Mexico Mergers and acquisitions involving Mexican assets p84-88 IM&A - Chevez Rulz 21/03/2013 08:44 Page 84 Mexico Mergers and acquisitions involving Mexican assets by Ricardo Rendon and Layda Carcamo, Chevez, Ruiz, Zamarripa y Cia, S.C. Whenever a corporate

More information

IRS Issues Final and New Proposed Regulations Implementing the 3.8% Tax on Investment Income

IRS Issues Final and New Proposed Regulations Implementing the 3.8% Tax on Investment Income IRS Issues Final and New Proposed Regulations Implementing the 3.8% Tax on Investment Income Final Regulations and New Proposed Regulations Implement the 3.8% Tax on Net Investment Income of Individuals,

More information

Deductibility of Fiduciary Expenses

Deductibility of Fiduciary Expenses IRS Publishes Final Regulations on Deductibility of Fiduciary Expenses Incurred by Estates and Trusts SUMMARY On May 8, 2014, the Treasury Department and the Internal Revenue Service ( IRS ) adopted final

More information

THIN CAPITALISATION LEGISLATION. A BACKGROUND PAPER FOR COUNTRY TAX ADMINISTRATIONS (Pilot version for comments)

THIN CAPITALISATION LEGISLATION. A BACKGROUND PAPER FOR COUNTRY TAX ADMINISTRATIONS (Pilot version for comments) THIN CAPITALISATION LEGISLATION A BACKGROUND PAPER FOR COUNTRY TAX ADMINISTRATIONS (Pilot version for comments) Initial draft - August 2012 1 THIN CAPITALISATION Introduction This paper, which has been

More information

Survey on the tax deductibility of interest payments

Survey on the tax deductibility of interest payments Survey on the tax deductibility of interest payments Please note: This survey will only provide for a very basic high-level overview of the most relevant rules regarding the tax deductibility of interest

More information

Transition to International Financial Reporting Standards

Transition to International Financial Reporting Standards Transition to International Financial Reporting Standards Topps Tiles Plc In accordance with IFRS 1, First-time adoption of International Financial Reporting Standards ( IFRS ), Topps Tiles Plc, ( Topps

More information

Roche Capital Market Ltd Financial Statements 2009

Roche Capital Market Ltd Financial Statements 2009 R Roche Capital Market Ltd Financial Statements 2009 1 Roche Capital Market Ltd, Financial Statements Reference numbers indicate corresponding Notes to the Financial Statements. Roche Capital Market Ltd,

More information

ASPE AT A GLANCE Section 3856 Financial Instruments

ASPE AT A GLANCE Section 3856 Financial Instruments ASPE AT A GLANCE Section 3856 Financial Instruments December 2014 Section 3856 Financial Instruments Effective Date Fiscal years beginning on or after January 1, 2011 1 SCOPE Applies to all financial instruments

More information

Spain Tax Alert. Corporate tax reform enacted. Tax rate. Tax-deductible expenses. International Tax. 2 December 2014

Spain Tax Alert. Corporate tax reform enacted. Tax rate. Tax-deductible expenses. International Tax. 2 December 2014 International Tax Spain Tax Alert 2 December 2014 Corporate tax reform enacted Contacts Brian Leonard bleonard@deloitte.es Francisco Martin Barrios fmartinbarrios@deloitte.es Elena Blanque elblanque@deloitte.es

More information

Hong Kong. Country M&A Team Country Leader ~ Nick Dignan Guy Ellis Rod Houng-Lee Anthony Tong Sandy Fung Greg James Louise Leung Nicholas Lui

Hong Kong. Country M&A Team Country Leader ~ Nick Dignan Guy Ellis Rod Houng-Lee Anthony Tong Sandy Fung Greg James Louise Leung Nicholas Lui Hong Kong Country M&A Team Country Leader ~ Nick Dignan Guy Ellis Rod Houng-Lee Anthony Tong Sandy Fung Greg James Louise Leung Nicholas Lui Mergers & Acquisitions Asian Taxation Guide 2008 Hong Kong March

More information

Slovenia. Chapter. Avbreht, Zajc & Partners Ltd. 1 General: Treaties. 2 Transaction Taxes. Ursula Smuk

Slovenia. Chapter. Avbreht, Zajc & Partners Ltd. 1 General: Treaties. 2 Transaction Taxes. Ursula Smuk Chapter Avbreht, Zajc & Partners Ltd. Ursula Smuk 1 General: Treaties 1.1 How many income tax treaties are currently in force in? 44 income tax treaties are currently in force in. 1.2 Do they generally

More information

STANDARD LIFE INVESTMENTS PROPERTY INCOME TRUST LIMITED

STANDARD LIFE INVESTMENTS PROPERTY INCOME TRUST LIMITED This document is issued by Standard Life Investments Property Income Trust Limited (the "Company") and is made available by Standard Life Investments (Corporate Funds) Limited (the AIFM ) solely in order

More information

Tax-efficient cross-border finance structures: opportunities and constraints

Tax-efficient cross-border finance structures: opportunities and constraints Tax-efficient cross-border finance structures: opportunities and constraints The increasing budget requirements of European countries and their implications for taxpayers CMS Annual Tax nference - Thursday

More information

Deloitte GAAP 2014: FRS 102 - Volume B (UK Series)

Deloitte GAAP 2014: FRS 102 - Volume B (UK Series) Deloitte GAAP 2014: UK Reporting - FRS 102 - Volume B (UK Series) Chapter B7: Free postage when you order online www.lexisnexis.co.uk/store or call 0845 370 1234 B7 Contents 1 Introduction 211 2 Scope

More information

Real Estate Investment Trusts

Real Estate Investment Trusts Real Estate Investment Trusts What are REITs? 1. REITs or Real Estate Investment Trusts to give them their full title are now common to many economies with a developed property market. Generally they are

More information

Tax implications on application of New UK GAAP, FRS 101. FRS 101 Overview Paper. Tax implications

Tax implications on application of New UK GAAP, FRS 101. FRS 101 Overview Paper. Tax implications FRS 101 Overview Paper Tax implications Date of publication: 22 January 2014 Contents INTRODUCTION 1 BACKGROUND 2 Summary of the changes to the accounting standards 2 Interaction of these changes with

More information

IFRS IN PRACTICE. IAS 7 Statement of Cash Flows

IFRS IN PRACTICE. IAS 7 Statement of Cash Flows IFRS IN PRACTICE IAS 7 Statement of Cash Flows 2 IFRS IN PRACTICE - IAS 7 STATEMENT OF CASH FLOWS TABLE OF CONTENTS 1. Introduction 3 2. Definition of cash and cash equivalents 4 2.1. Demand deposits 4

More information

New York City Council Passes Bill Banning Use of Credit Checks in Employment Decisions

New York City Council Passes Bill Banning Use of Credit Checks in Employment Decisions New York City Council Passes Bill Banning Use of Credit Checks in Employment Decisions Amendment to the New York City Human Rights Law Makes It an Unlawful Discriminatory Practice for Most Employers to

More information

GLOBAL GUIDE TO M&A TAX

GLOBAL GUIDE TO M&A TAX Quality tax advice, globally GLOBAL GUIDE TO M&A TAX 2013 EDITION www.taxand.com CYPRUS Cyprus From a Buyer s Perspective 1. What are the main differences among acquisitions made through a share deal versus

More information

May 20, 2009 Client Alert

May 20, 2009 Client Alert Client Alert Bei j i n g Fr a n k f u r t Ho n g Ko n g Lo n d o n Lo s An g e l e s Mu n i c h Ne w Yo r k Si n g a p o r e To k y o Wa s h i n g t o n, DC International Tax Regime Targeted in Latest

More information

STRUCTURING A BUSINESS AS A LIMITED LIABILITY PARTNERSHIP (LLP)

STRUCTURING A BUSINESS AS A LIMITED LIABILITY PARTNERSHIP (LLP) STRUCTURING A BUSINESS AS A LIMITED LIABILITY PARTNERSHIP (LLP) CORPORATE LAW INTRODUCTION Partnerships have been used for many years as flexible business vehicles for enterprises, especially where they

More information

UNITED KINGDOM LIMITED LIABILITY PARTNERSHIPS

UNITED KINGDOM LIMITED LIABILITY PARTNERSHIPS UNITED KINGDOM LIMITED LIABILITY PARTNERSHIPS Background A United Kingdom Limited Liability Partnership (LLP) has become a very popular vehicle for international commercial activity. This is because the

More information

Due Diligence in Regulation D Offerings

Due Diligence in Regulation D Offerings FINRA Provides Guidance on the Obligation of Broker-Dealers to Conduct Reasonable Investigations in Regulation D Offerings SUMMARY FINRA has published a regulatory notice providing guidance to broker-dealers

More information

Assurance and accounting A Guide to Financial Instruments for Private

Assurance and accounting A Guide to Financial Instruments for Private june 2011 www.bdo.ca Assurance and accounting A Guide to Financial Instruments for Private Enterprises and Private Sector t-for-profit Organizations For many entities adopting the Accounting Standards

More information

IRS Issues Final FATCA Regulations

IRS Issues Final FATCA Regulations IRS Issues Final FATCA Regulations The United States Internal Revenue Service (IRS) has issued long-awaited final regulations (the Final Regulations) under the Foreign Account Tax Compliance Act (FATCA).

More information

International Accounting Standard 28 Investments in Associates

International Accounting Standard 28 Investments in Associates International Accounting Standard 28 Investments in Associates Scope 1 This Standard shall be applied in accounting for investments in associates. However, it does not apply to investments in associates

More information

The statements are presented in pounds sterling and have been prepared under IFRS using the historical cost convention.

The statements are presented in pounds sterling and have been prepared under IFRS using the historical cost convention. Note 1 to the financial information Basis of accounting ITE Group Plc is a UK listed company and together with its subsidiary operations is hereafter referred to as the Company. The Company is required

More information

Multinationals will be concerned about additional complexity in controlled foreign company proposals

Multinationals will be concerned about additional complexity in controlled foreign company proposals Multinationals will be concerned about additional complexity in controlled foreign company proposals 7 April 2015 In brief Multinational enterprises (MNEs) will be concerned about the Base Erosion and

More information

Real Estate Investment Trusts (REITs): Tax Policy Rationale

Real Estate Investment Trusts (REITs): Tax Policy Rationale 2013 Number 2 Real Estate Investment Trusts (REITs): Tax Policy Rationale 69 Real Estate Investment Trusts (REITs): Tax Policy Rationale Deirdre Donaghy Business Tax Team, Fiscal Policy Division, Department

More information

The key budget changes

The key budget changes The key budget changes Taking into account Finance Bill 2009 May 2009 Contents 4. Mainstream Corporation Tax 5. briefing on the key expected corporation tax changes 19. briefing on other expected corporation

More information

Notes on the parent company financial statements

Notes on the parent company financial statements 316 Financial statements Prudential plc Annual Report 2012 Notes on the parent company financial statements 1 Nature of operations Prudential plc (the Company) is a parent holding company. The Company

More information

FBAR Reporting Requirements for Foreign Financial Accounts

FBAR Reporting Requirements for Foreign Financial Accounts FBAR Reporting Requirements for Foreign Financial Accounts FinCEN Releases Notice of Proposed Rulemaking to Revise Certain Provisions of the FBAR Regulations SUMMARY The Financial Crimes Enforcement Network

More information

Indian Accounting Standard (Ind AS) 7 Statement of Cash Flows

Indian Accounting Standard (Ind AS) 7 Statement of Cash Flows Contents Indian Accounting Standard (Ind AS) 7 Statement of Cash Flows Paragraphs OBJECTIVE SCOPE 1 3 BENEFITS OF CASH FLOW INFORMATION 4 5 DEFINITIONS 6 9 Cash and cash equivalents 7 9 PRESENTATION OF

More information

CIMA Managerial Level Paper F2 FINANCIAL MANAGEMENT (REVISION SUMMARIES)

CIMA Managerial Level Paper F2 FINANCIAL MANAGEMENT (REVISION SUMMARIES) CIMA Managerial Level Paper F2 FINANCIAL MANAGEMENT (REVISION SUMMARIES) Chapter Title Page number 1 The regulatory framework 3 2 What is a group 9 3 Group accounts the statement of financial position

More information

Share purchase or asset purchase: tax issues

Share purchase or asset purchase: tax issues Share purchase or asset purchase: tax issues This practice note looks at:1. The main tax advantages for the buyer and seller of a share purchase.2. The main tax advantages for the buyer and seller of an

More information

Sri Lanka Accounting Standard-LKAS 7. Statement of Cash Flows

Sri Lanka Accounting Standard-LKAS 7. Statement of Cash Flows Sri Lanka Accounting Standard-LKAS 7 Statement of Cash Flows CONTENTS SRI LANKA ACCOUNTING STANDARD-LKAS 7 STATEMENT OF CASH FLOWS paragraphs OBJECTIVE SCOPE 1 3 BENEFITS OF CASH FLOW INFORMATION 4 5 DEFINITIONS

More information

Statement of Cash Flows

Statement of Cash Flows HKAS 7 Revised February November 2014 Hong Kong Accounting Standard 7 Statement of Cash Flows HKAS 7 COPYRIGHT Copyright 2014 Hong Kong Institute of Certified Public Accountants This Hong Kong Financial

More information

ASPE at a Glance. Standards Included in Topic

ASPE at a Glance. Standards Included in Topic ASPE AT A GLANCE ASPE AT A GLANCE This publication has been compiled to assist users in gaining a high level overview of Accounting Standards for Private Enterprises (ASPE) included in Part II of the CPA

More information

Monaco Corporate Taxation

Monaco Corporate Taxation Introduction Monaco is a sovereign principality. France is a guarantor of the sovereignty and territorial integrity of Monaco, while Monaco is to conform to French interests. Although the Prince is the

More information

Tax accounting services: Foreign currency tax accounting. October 2012

Tax accounting services: Foreign currency tax accounting. October 2012 Tax accounting services: Foreign currency tax accounting October 2012 The globalization of commerce and capital markets has resulted in business, investment and capital formation transactions increasingly

More information

OECD Tax Alert. BEPS action 2: Neutralizing the effects of hybrid mismatch arrangements. OECD proposals. International Tax. 16 October 2015.

OECD Tax Alert. BEPS action 2: Neutralizing the effects of hybrid mismatch arrangements. OECD proposals. International Tax. 16 October 2015. International Tax OECD Tax Alert Contacts Bill Dodwell bdodwell@deloitte.co.uk Joanne Bentley jcbentley@deloitte.co.uk Joanne Pleasant jmpleasant@deloitte.co.uk Simon Cooper sjcooper@deloitte.co.uk David

More information

Related parties debt remission

Related parties debt remission Issue 3/2015 Related parties debt remission Related parties debt remission Inland Revenue has released an Officials Issues Paper seeking feedback on proposed legislative changes intended to make the debt

More information

Worldwide Debt Cap Section 35 & Schedule 15 Finance Act 2009

Worldwide Debt Cap Section 35 & Schedule 15 Finance Act 2009 Worldwide Debt Cap Section 35 & Schedule 15 Finance Act 2009 Olswang LLP 2010 www.olswang.com 1 Worldwide Debt Cap Mark Joscelyne and Hugo Webb of Olswang LLP discuss the worldwide debt cap in Schedule

More information

Coming to America. U.S. Tax Planning for Foreign-Owned U.S. Operations

Coming to America. U.S. Tax Planning for Foreign-Owned U.S. Operations Coming to America U.S. Tax Planning for Foreign-Owned U.S. Operations September 2015 Table of Contents Introduction... 2 Tax Checklist for Foreign-Owned U.S. Operations... 2 Typical Life Cycle of Foreign-Owned

More information

Investment Structures for Real Estate Investment Funds. kpmg.com

Investment Structures for Real Estate Investment Funds. kpmg.com Investment Structures for Real Estate Investment Funds kpmg.com Contents Investment Structures for Real Estate Investment Funds 01 Who Are the Investors? 02 In What Assets Will the Fund Invest? 03 Will

More information

Investments in Associates

Investments in Associates Indian Accounting Standard (Ind AS) 28 Investments in Associates Investments in Associates Contents Paragraphs SCOPE 1 DEFINITIONS 2-12 Significant Influence 6-10 Equity Method 11-12 APPLICATION OF THE

More information

Enterprise Management Incentive Options

Enterprise Management Incentive Options Enterprise Management Incentive Options Contents Overview... 03 Qualifying company... 03 Eligible Employees... 06 Terms and Circumstances under which the option is granted... 06 Disqualifying events...

More information

Section N: Cambridge University Endowment Fund: Reports and financial statements to 30 June 2013. Cambridge University Endowment Fund

Section N: Cambridge University Endowment Fund: Reports and financial statements to 30 June 2013. Cambridge University Endowment Fund Section N: Cambridge University Endowment Fund: Reports and financial statements to 30 June 2013 Cambridge University Endowment Fund Reports and financial statements 30 June 2013 IMPORTANT NOTICE The Cambridge

More information