18 April 2017

AIMA: Double taxation treaty passport scheme review

HMRC received 17 written responses and met with a small number of respondents. HMRC is very grateful to all the respondents which included accountancy firms, lawyers, tax advisers, sovereign wealth funds (SWF) and representative bodies. Responses were sought to ten questions under the following headings:

·Renewing the scheme;

·Treaty Passport renewal process;

·Sanctions for misuse;

·Extending the scheme;

·UK partnerships as borrowers;

·Overseas partnerships as lenders; and

·Sovereign investors and pension funds.

Key elements of the government’s response are:

(i)    the scheme will be made available to all UK borrowers that have an obligation to deduct withholding tax, including UK partnerships, individuals and charities;

(ii)   transparent entities (including partnerships) will be admitted to the scheme as lenders where all of the constituent beneficial owners of the income are entitled to the same treaty benefits under the same treaty; and

(iii)  sovereign wealth funds and pension funds who are utilising withholding tax treaty rates will be admitted into the scheme as lenders.

As announced at Spring Budget 2017, HMRC has also published the scheme’s Terms and Conditions and Guidance, which will commence for loans entered into on or after 6 April 2017. 

Full press release

Full consultation response

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