The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
This guidance note outlines the international tax issues a company should consider in advance of its year end.
The UK negotiated a Withdrawal Agreement and left the EU on 31 January 2020 with an 11-month implementation period up to 31 December 2020. For companies, there are several areas of UK tax law that are likely to be significantly impacted by a withdrawal from the EU. Most notably, a no-deal Brexit at the end of the implementation period will affect the treatment of international transactions between groups of companies that operate across multiple EU member states. However, the impact of EU-derived law on domestic legislation also means that a no-deal Brexit may have wider implications for UK resident companies.
The impact in practice will vary significantly depending on the final exit route that is agreed between the EU and the UK. For further details of the potential impact together with suggested action points, see the Brexit ― impact for UK companies guidance note.
A company can elect for its foreign branches to be exempt from corporation tax. In addition, the losses of exempt branches are not available to set against other profits.
This election is irrevocable and applies to all the foreign branches of a company.
The election must be made before the start of the first accounting period to which it will apply. See INTM281020 for details on the required form and information for the election.
The benefit of an election will depend on:
whether losses may arise in the future in the company’s foreign branches
the rate of overseas tax which is paid on the profits of the foreign branches
If significant losses are anticipated, then a branch exemption election may not be beneficial as these losses would not be available to set against UK profits of the company.
If the overseas tax is greater than the UK corporation tax on the same profits, this will be sufficient to fully credit any UK corporation tax in any case and
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