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In last week's Budget, as part of a plan for corporate tax reform, the Chancellor said that the Government intends to move to a more territorial basis for taxing the profits of foreign branches, reforming the rules in spring 2011.
Consultation on the matter will include options for retaining branch loss relief.
A working group of representatives from businesses is to be established to discuss options and proposals in more detail. Anyone who would like to join this group, or make a nomination, should email Alex Harris by 6 July.
A discussion document will be published in July to set out options for the scope of a foreign branch profits exemption and on foreign branch loss relief, with detailed proposals and draft legislation to follow later in the year.
In addition, a full reform of controlled foreign companies (CFCs) rules is to be completed in spring 2012, with consultation due to take place over the summer on interim improvements to the current rules, to be introduced in spring 2011.
Another working group is to be established to discuss these interim improvements. For further details, email Robert Edwards by 6 July.
Commenting on the fact that the CFC reform period is to be extended, Peter Cussons of PricewaterhouseCoopers LLP said this would mean a period of uncertainty for business, although there ‘should, however, be some confidence for business that what emerges will be acceptable’.
