The UK’s HM Revenue and Customs, on December 22, issued a series of draft examples illustrating the application of hybrid mismatch rules in previously released tax legislation proposed for Finance Bill 2016.
The draft hybrid mismatch legislation, proposed October 9, is consistent with the final recommendations of the OECD/G20 base erosion profit shifting (BEPS) report under action 2. The draft examples are taken from the BEPS work, with additional examples added on hybrid transfers.
The government said that further guidance on the application of the hybrid rules will be provided in 2016.
The hybrid mismatch rules are designed to counter tax avoidance through arrangements which result in double deductions for payments or a deduction for a payment with no corresponding inclusion in ordinary income.
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