F1PART 6AHybrid and other mismatches
CHAPTER 10Dual territory double deduction cases
Application of Chapter
259JACircumstances in which the Chapter applies
1
This Chapter applies if conditions A and B are met.
2
Condition A is that a company is a—
a
dual resident company, or
b
relevant multinational company.
3
For the purposes of this Chapter a company is a “dual resident company” if—
a
it is UK resident, and
b
it is also within the charge to a tax under the law of a territory outside the United Kingdom because—
i
it derives its status as a company from that law,
ii
its place of management is in that territory, or
iii
it is for some other reason treated under that law as resident in that territory for the purposes of that tax.
4
For the purposes of this Chapter a company is a “relevant multinational company” if—
a
it is within the charge to a tax, under the law of a territory (“the PE jurisdiction”) in which it is not resident for tax purposes, because it carries on business in that territory through a permanent establishment in that territory, and
b
either—
i
the PE jurisdiction is the United Kingdom, or
ii
the territory in which the company is resident for tax purposes (“the parent jurisdiction”) is the United Kingdom.
5
Condition B is that there is an amount (“the dual territory double deduction amount”) that, disregarding this Chapter and any equivalent provision under the law of a territory outside the United Kingdom, it is reasonable to suppose could, by reason of the company being a dual resident company or a relevant multinational company—
a
be deducted from the company's income for an accounting period (“the deduction period”) for corporation tax purposes, and
b
also be deducted from the company's income for a taxable period (“the foreign deduction period”) for the purposes of a tax charged under the law of a territory outside the United Kingdom.
6
The following provisions provide for the counteraction of the dual territory double deduction amount—
a
section 259JB (cases where a company is dual resident),
b
section 259JC (cases where a company is a relevant multinational and the United Kingdom is the parent jurisdiction), and
c
section 259JD (cases where a company is a relevant multinational, the United Kingdom is the PE jurisdiction and the amount is not counteracted in the parent jurisdiction).
Pt. 6A inserted (with effect in accordance with Sch. 10 paras. 18-21 of the amending Act) by Finance Act 2016 (c. 24), Sch. 10 para. 1