Taxation (International and Other Provisions) Act 2010 section 295H

Overview of Chapter

Section 295H provides an overview of the chapter dealing with multinational payee deduction/non-inclusion mismatches, where a company within the charge to UK corporation tax makes a payment or quasi-payment to a payee that is a multinational company, and a mismatch arises because of that multinational status.

• This chapter targets situations where a payer within the charge to corporation tax claims a deduction for a payment or quasi-payment, but the corresponding income is not fully included in the taxable income of the payee because the payee is a multinational company operating across different jurisdictions.
• The mismatch is counteracted by adjusting the corporation tax treatment of the payer — specifically by restricting the deduction that would otherwise be available.
• Key concepts used in the chapter include "multinational company", "parent jurisdiction" and "PE jurisdiction", as well as the defined terms "payment", "quasi-payment", "payment period", "relevant deduction", "payer", "payee" and "permanent establishment".
• The chapter defines what constitutes a "multinational payee deduction/non-inclusion mismatch", sets out the conditions that must be met for the rules to apply, explains how the amount of the mismatch is calculated, and provides the mechanism for counteracting it.