Earlier today we have already reported on the consultation that the HM Treasury and the HMRC have opened with respect to the UK Patent Box regime. Next to that the HM Treasury has also opened a public consultation on the Tax deductibility of corporate interest expense. The deadline for responses for this consultation is January 14, 2016.
The Consultation Document defines the scope of the consultation as follows:
“The government wishes to look at ways to tackle BEPS involving interest expense in order to reduce unfair outcomes and imbalances in the tax system. However, the government wants to ensure the UK tax system remains competitive so that it continues to play a part in attracting and retaining business investment in the UK.
The government wants to ensure that there is certainty for businesses operating in the UK, and that they can continue to obtain deductions for interest expenses commensurate with their activities, while limiting risk to the exchequer. Any changes to tackling BEPS involving interest expense would also need to be operationally efficient and take account of the compliance and administration burden for the government and business.
This document summarises the key aspects of the OECD report on Action 4 and sets out some specific questions to frame a discussion for a UK domestic policy context. At this stage, the government is seeking views from all stakeholders on the proposals in the OECD report. The responses to this document will be considered in the development of a future business tax roadmap.”
Subjects discussed in the Consultation Document include a.o.:
· The OECD best practice recommendations on interest expense
· Summary of the OECD’s best practice recommendations on interest expense
· UK implementation of the OECD best practice recommendations on interest expense
o Timing
o Scope of an interest restriction
o Definition of interest
o Fixed ratio rule
o Setting a fixed ratio
o Group ratio rule
o De minimis threshold
o Addressing volatility
o Public-Benefit Project (PBP) Exclusion
o Targeted rules
o Banking and insurance groups
o Transitional rules
o Interaction with other restrictions on tax relief for interest
Click here to be forwarded to the Consultation Document as available on the website of the HM Treasury.
Click here to be forwarded to the final report on BEPS Action 4, which was published by the OECD on October 5, 2015 as available in the OECD iLibrary, which will open in a new window.
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