The government has published the final draft of regulations making technical amendments to the rules for offshore receipts in respect of intangible property (ORIP) introduced by Finance Act 2019. These rules tax income generated by multinational groups from intellectual property held in low-tax jurisdictions, to the extent that income is referable to UK sales.
The draft Income Tax (Trading and Other Income) Act 2005 (Amendments to Chapter 2A of Part 5) Regulations 2019 include amendments to:
extend the scope of the legislation to businesses that do not qualify for relief under a double tax treaty;
introduce changes to the definition of UK sales, with ‘look-through’ rules for distributors and resellers;
clarify when online advertising will be a UK sale;
exempt third party sales where intangible property makes an insignificant contribution;
exempt companies resident in specified territories, with a power to make further regulations in this respect;
exempt income of opaque partnerships which is taxable in certain jurisdictions, to prevent a tax charge arising on both the partners and the partnership;
exempt tax transparent entities situated in certain jurisdictions and 100% owned by residents in that territory;
provide exemption from a double ORIP charge on entities in the same control group; and
clarify that there is no duty to withhold income tax on payments that are also chargeable under the ORIP rules
Most of the relieving amendments will have effect from 6 April 2019, with the remainder applying only to amounts arising after the regulations are made.
HMRC has also published a tax information and impact note outlining the amendments, which follow consultation on an initial draft of the regulations between May and July. HMRC has also updated its draft technical guidance on the ORIP rules, which will form new ‘International manual’ chapter INTM870000.
The government has published the final draft of regulations making technical amendments to the rules for offshore receipts in respect of intangible property (ORIP) introduced by Finance Act 2019. These rules tax income generated by multinational groups from intellectual property held in low-tax jurisdictions, to the extent that income is referable to UK sales.
The draft Income Tax (Trading and Other Income) Act 2005 (Amendments to Chapter 2A of Part 5) Regulations 2019 include amendments to:
extend the scope of the legislation to businesses that do not qualify for relief under a double tax treaty;
introduce changes to the definition of UK sales, with ‘look-through’ rules for distributors and resellers;
clarify when online advertising will be a UK sale;
exempt third party sales where intangible property makes an insignificant contribution;
exempt companies resident in specified territories, with a power to make further regulations in this respect;
exempt income of opaque partnerships which is taxable in certain jurisdictions, to prevent a tax charge arising on both the partners and the partnership;
exempt tax transparent entities situated in certain jurisdictions and 100% owned by residents in that territory;
provide exemption from a double ORIP charge on entities in the same control group; and
clarify that there is no duty to withhold income tax on payments that are also chargeable under the ORIP rules
Most of the relieving amendments will have effect from 6 April 2019, with the remainder applying only to amounts arising after the regulations are made.
HMRC has also published a tax information and impact note outlining the amendments, which follow consultation on an initial draft of the regulations between May and July. HMRC has also updated its draft technical guidance on the ORIP rules, which will form new ‘International manual’ chapter INTM870000.
