Taxation (International and Other Provisions) Act 2010 section 4

Meaning of "double taxation" in sections 2 and 3

Section 4 explains how "double taxation" should be understood for the purposes of sections 2 and 3, particularly where a foreign country has granted a tax relief to encourage economic or social development.

• Foreign tax that was waived under a development relief is treated as if it had actually been paid, creating a "tax sparing" effect.
• The relief must have been given under the law of a territory outside the UK to promote industrial, commercial, scientific, educational or other development.
• The development relief must be covered by a provision in a double taxation arrangement between the UK and the other territory.
• This deemed payment of tax means double taxation is recognised even where the foreign tax was not actually collected, allowing the UK to give effect to the relevant treaty provisions.