Corporation Tax Act 2009 section 18R

Meaning of "full treaty territory"

Section 18R defines what qualifies as a "full treaty territory" for the purposes of the rules on foreign permanent establishments of UK resident companies.

• A territory is a "full treaty territory" if the UK has double taxation arrangements with it that include a relevant non-discrimination provision
• A relevant non-discrimination provision requires that a permanent establishment of an enterprise from one treaty partner is not taxed less favourably in the other treaty partner's territory than local enterprises carrying on the same activities
• Both conditions must be met: the existence of a double taxation agreement alone is not sufficient — it must also contain the specific non-discrimination clause
• This definition is important because the foreign permanent establishment exemption rules in Chapter 3A treat profits and losses differently depending on whether the territory concerned is a full treaty territory