Press Release

Largest reform of Foreign Income Taxation in 50 years poses challenges for UK Businesses

Legislation designed to make the UK competitive could add to the compliance burden warn experts

London, 14 October 2009 - The 2009 Finance Act sees the introduction of the biggest change in fifty years to the tax rules governing the foreign earnings of UK companies.

This radical overhaul was designed by the Government to make the UK a more attractive home for multinationals and to align the UK with European law.This first stage of the reforms to the Taxation of Foreign Profits will introduce a much simpler exemption system for foreign dividends but the new debt cap rules will also impose significant compliance burdens on multinational businesses.  These rules mean that any UK group with debt capital, at home or abroad, will need to reassess their tax position to avoid incurring significant tax costs.

The Consultant Editor of the new title 'Taxation of Foreign Profits 2009-2010' is Diane Hay, and the General Editor is Philip Baker QC. Diane Hay was previously a senior official of HM Revenue & Customs where she was a member of the HMT/HMRC Joint Steering Committee on Foreign Profits. She is now a special adviser to PwC on international tax.  Philip is a QC in practice, an academic at London University and an author on international tax and treaty law.

Philip Baker QC says: “The introduction of the new rules on the taxation of foreign profits and the worldwide debt cap has been contentious.  All the UK's major companies now face the challenge of complying with their provisions. Boards should not underestimate the potential impact of this legislation.  This book is designed to provide a guide through this legislation.”
Taxation of Foreign Profits 2009-2010 is published by LexisNexis. Compiled by a high profile expert team of lawyers and accountants the book explains the core issues stemming from the most extensive changes to UK law on the taxation of foreign income in over 50 years, and shows how these rules will apply with examples of their practical application.

Chapters are structured to identify key issues in the interpretation and application of each element of the new legislation, with a discussion of possible solutions. Each chapter contains practical examples of the impact of the new rules.

General Editor: Philip Baker QC, Gray’s Inn Tax Chambers;
Consultant Editor:  Diane Hay, PwC
Authors: Alastair Munro, KPMG; Rupert Shiers, McGrigors LLP; Neil Edwards and Peter Cussons, PwC; Ian Sandles, Nomura; Richard Sumner, Ernst & Young; James MacLachlan, Patrick O’Gara and John Fairley, Baker & McKenzie

Introduction by Diane Hay
Distribution Exemption
Debt Cap: General
Debt Cap: Financial Services and Insurance
International Movements of Capital
Controlled Foreign Company Rules:  Future Reform
EC Treaty and Bi-lateral Tax Treaty Issues

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