What is a qualifying territory under Corporation Tax Act 2009 section 931C?

A qualifying territory is one that has double taxation relief arrangements in force with the UK under section 2(1) of TIOPA 2010 and whose treaty contains a non-discrimination provision. The Treasury may also designate or remove territories by regulations, subject to the affirmative resolution procedure in Parliament.

What does non-discrimination provision mean for the purposes of section 931C?

A non-discrimination provision, following Articles 24 and 3 of the OECD Model Tax Convention, requires that nationals of one treaty partner are not subjected to more burdensome taxation or tax-related requirements in the other partner's territory than that country's own nationals face in the same circumstances.

How is company residence determined under section 931C?

A company is resident in a territory if, under that territory's laws, it is liable to tax there by reason of domicile, residence or place of management. A company taxed only on income sourced there or capital situated there, without broader liability, does not count as resident under this definition.

Can the Treasury override the standard definition of qualifying territory?

Yes. The Treasury can make regulations designating a territory as qualifying even without the required treaty or non-discrimination provision, or removing qualifying status from one that meets those conditions. Regulations can apply differently to different company types and take effect for accounting periods already in progress.

Corporation Tax Act 2009 section 931C

Meaning of "qualifying territory"

Section 931C defines what counts as a "qualifying territory" for the purposes of the small company distribution exemption under section 931B, and sets out the related concepts of company residence and non-discrimination.

A qualifying territory is one that has a double taxation treaty with the UK containing a non-discrimination provision, though the Treasury can add or remove territories by regulations
A company is resident in a territory if it is liable to tax there by reason of domicile, residence or place of management — not merely because it has income or capital sourced there
A non-discrimination provision means that nationals of one treaty country must not face heavier taxation or tax-related requirements in the other treaty country than that country's own nationals in the same circumstances
Treasury regulations can apply differently to different types of company and can take effect for accounting periods already in progress when the regulations are made

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