Articles by author
Principal and main purpose tests in tax treaties: a UK tribunal approach
The recent decision in Burlington Loan Management DAC v HMRC shows the difficulty in determining when parties have a main purpose of obtaining the benefit of a double tax treaty and indeed, which parties’ purposes are relevant. Despite the fact that this case was determined on the basis of UK tax case law, it is likely that an international fiscal meaning of “principal purpose” will develop over time. The UK tribunal decision shows the complexity of assessing whose purposes are relevant and what, on the basis of the evidence, those purposes actually were. This raises important considerations for taxpayers determining whether treaty benefits are available.
1 NOV 2022Pillar Two: the global minimum tax and its implications for financing transactions
The last few years have seen discussions at an inter-governmental level, led by the OECD, on how to amend the international tax system to deal with the changing business practices created by the digital economy. This includes an agreement to implement a global minimum corporate tax rate of 15% for large multi-national entities (MNEs). These discussions have now progressed to the stage where individual jurisdictions (including the UK) are beginning to introduce domestic legislation to implement the principles of the minimum tax, such that the theory is becoming reality. These rules will have implications for the assumptions being made by lenders as to the way borrowers under certain types of financing will be taxed. This article looks at some of these implications at the borrower level.
1 JUL 2023
