Meaning of “tax” etc and treatment of cases where tax charged at a nil rateU.K.
2U.K.In section 259B (“tax” means certain taxes on income and includes foreign tax etc)—
(a)after subsection (3) insert—
“(3A)The payment of any withholding tax in respect of any amount is to be ignored for the purposes of this Part.”, and
(b)at the end insert—
“(5)In any case where—
(a)a person is resident in a territory outside the United Kingdom generally for the purposes of the law of the territory or for particular purposes under that law, and
(b)the law of the territory has no provision for a person to be resident for tax purposes under its law,
any reference in Chapter 8 or 11 to a person's residence for tax purposes in the territory is to be read as a reference to the person's residence as mentioned in paragraph (a).”
3U.K.In section 259BC (meaning of “ordinary income”), in subsection (3), for the words from “it is excluded” to the end substitute “—
(a)it is charged to the relevant tax at a nil rate, or
(b)it is excluded, reduced or offset by any exemption, exclusion, relief, or credit—
(i)that applies specifically to all or part of the amount of income (as opposed to ordinary income generally), or
(ii)that arises as a result of, or otherwise in connection with, a payment or quasi-payment that gives rise to the amount of income.”
4U.K.In section 259FA (circumstances in which Chapter 6 applies), after subsection (7) insert—
“(7A)For the purposes of subsections (6) and (7) any increase in taxable profits or reduction of losses is to be ignored in any case where tax is charged at a nil rate under the law of the parent jurisdiction.”
5U.K.In section 259GB (hybrid payee deduction/non-inclusion mismatches and their extent), in subsection (3)(b)(i), after “charged” insert “ at a higher rate than nil ”.
6U.K.In section 259KB (meaning of “excessive PE deduction”), after subsection (4) insert—
“(4A)For the purposes of subsection (4) any increase in taxable profits or reduction of losses is to be ignored in any case where tax is charged at a nil rate under the law of the parent jurisdiction.”