Taxation (International and Other Provisions) Act 2010 section 173

Meaning of "qualifying territory" and "non-qualifying territory"

Section 173 defines what counts as a "qualifying territory" and a "non-qualifying territory" for the purposes of the transfer pricing exemption for small and medium-sized enterprises under section 167.

• The United Kingdom is always a qualifying territory; other territories qualify if they have a double taxation agreement with the UK that includes a non-discrimination clause, unless the Treasury has specifically designated them as non-qualifying.
• A territory can also qualify if it has a double taxation agreement with the UK and the Treasury has positively designated it as a qualifying territory by regulations, even without a non-discrimination clause.
• A non-discrimination clause means a provision ensuring that nationals of one contracting state are not subjected to taxation or tax-related requirements in the other state that are more burdensome than those applied to that other state's own nationals in the same circumstances.
• Any Treasury regulations designating territories as qualifying or non-qualifying must be approved in draft by the House of Commons before they can be made.