The UK government on October 22 launched public consultations on proposed rules designed to limit excessive corporate interest deductions and revise the country’s patent box regime. Both proposals respond to the OECD/G20 base erosion and profit shifting (BEPS) project final reports.
In a statement accompanying the consultation on interest deduction limits, Financial Secretary to the Treasury, David Gauke, said the government believes that the best practices outlined in the final action 4 BEPS report are an appropriate response to counter tax avoidance by multinationals through excessive interest deductions.
He said that, given the importance of the issue, the government decided to launch a consultation on the topic to seek views on how best to respond to the OECD proposal. The information gathered from the consultation will be considered in the development of a future business tax roadmap to be presented to Parliament, Gauke said.
The consultation document asks for stakeholder feedback in response to 18 specific questions about final BEPS action item 4. Comments are due January 14, 2016.
The government said in the consultation document that new rules limiting interest deductions are not likely to be introduced until after April 1, 2017.
Patent Box
A second consultation launched today sets out how the UK proposes to modify its patent box regime to comply with the substantial activity requirements of action 5 of the BEPS reports and asks for feedback on its proposed plan.
In a statement accompanying the consultation, Gauke noted that 639 companies have taken advantage of the UK’s current patent box rules, receiving a tax benefit of £335 million.
The consultation asks for responses to 17 to specific questions, as well as other comments, by December 4.
The government said it will publish draft legislation informed by the consultation process sometime in December. The government expects publish a response to that consultation with necessary changes to the draft legislation in the spring of 2016.
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