Taxation (International and Other Provisions) Act 2010 section 172

Meaning of "small enterprise" and "medium-sized enterprise"

Section 172 defines "small enterprise" and "medium-sized enterprise" for the purposes of the transfer pricing exemptions in Chapter 3, using the EU definition but with certain modifications.

• The definitions are based on the EU Commission Recommendation 2003/361/EC, which sets out categories of micro, small and medium-sized enterprises by reference to staff headcount and financial thresholds.
• A "small enterprise" follows the EU Annex definition directly, while a "medium-sized enterprise" is one that qualifies as micro, small or medium-sized under the Annex but is not small — in other words, it is a genuinely mid-sized business.
• The EU definitions are modified so that the relevant data (staff numbers and financial amounts) are those for the chargeable period in question, calculated on an annual basis, rather than using the EU's own timing rules.
• Further modifications disapply certain EU provisions, including the good faith declaration rule, the two-consecutive-period stability rule, and the newly established enterprise estimation rule, as well as excluding the rights of liquidators or administrators from the assessment of enterprise size.