The UK’s HM Treasury announced on October 6 that the UK government intends to propose rules to address hybrid mismatch arrangements consistent OCED/G20 base erosion profit shifting (BEPS) plan guidance on the topic.
The government will publish a consultation on hybrid mismatches to coincide with HM Treasury’s Autumn Statement to Parliament on December 3, HM Treasury said.
Treasury said that as a part of the consultation, the UK government will consider special rules pertaining to banks’ and insurers’ hybrid regulatory capital instruments.”These provisions would prevent these instruments from being used for tax avoidance purposes, while recognizing banks’ and insurers’ unique regulatory requirements and looking to ensure that they are not disadvantaged relative to other sectors,” HM Treasury said.
In its work on hybrid mismatches released September 16, the OECD said that consensus has not been reached on the application of hybrid mismatch rules to hybrid regulatory capital that is issued intra-group. The OECD said that until agreement can be reached on this issue, governments should adopt whatever policy they think best in the area.
The UK announcement is the latest in a series of steps proposed to tackle aggressive tax planning. On September 22, the UK government formally committed to implementing the country-by-country reporting template provided for in the OECD/G20 BEPS recommendations.
And, on September 29 Chancellor of the Exchequer George Osborne said the UK would clamp down on tax avoidance schemes used by technology companies, reportedly referring to plans to target companies that use double Irish tax avoidance arrangements.
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