Taxation (International and Other Provisions) Act 2010 section 157

Direct participation

Section 157 defines what it means for one person to be "directly participating" in the management, control or capital of another person, a concept used across several parts of the Act.

• Direct participation is relevant to transfer pricing rules, double taxation relief, advance pricing agreements, hybrid mismatch provisions, and corporate interest restriction rules.
• A person is directly participating in another person only if that other person is either a body corporate or a firm (i.e. a partnership).
• The other person must also be controlled by the first person at the relevant time.
• Both conditions — the type of entity and the control requirement — must be met simultaneously for direct participation to exist.