Taxation (International and Other Provisions) Act 2010 section 259I

Overview of Chapter

Section 259I provides an overview of the rules that counteract double deduction mismatches arising because a person is a hybrid entity — that is, an entity treated differently for tax purposes in different countries.

• Chapter 9 targets situations where the same deduction can be claimed twice — once by a hybrid entity and once by an investor in that entity — because of differences in how the entity is treated for tax in different countries.
• The rules apply where either the hybrid entity or an investor in it is within the charge to UK corporation tax, and counteraction works by adjusting the corporation tax treatment of that entity or investor.
• Where an investor in the hybrid entity is within the charge to corporation tax, the mismatch is counteracted at the investor level first; the hybrid entity's own deduction is only restricted if the mismatch has not already been fully dealt with by an equivalent rule in another country.
• Key definitions — including "hybrid entity", "investor", and "investor jurisdiction" — are set out elsewhere in the legislation, and the conditions that must be met before the chapter applies, together with the definition of the "hybrid entity double deduction amount", are contained in dedicated provisions within the chapter.