Taxation Of Foreign Profits On Companies
Taxation of foreign profits on companies
Introduction
In June 2007, HMRC released a discussion document titled ‘Taxation of foreign profits of companies’. The proposal covers widespread changes by the government to make the UK more competitive and attract capital investment to boost the economy.
The changes to the taxation of foreign profits have been driven by pressure from business concerning the complexity of the UK tax system. The other main reason of the reform is the uncertainty as to whether the UK’s current regime is consistent with EU law, owing to the recent rulings of the European Court of Justice (ECJ) in current cases (Anon 2007).
Current UK Tax System
Currently, UK companies receiving dividends from other UK companies suffer no tax. Dividends from foreign companies on the other hand are currently subject to tax. The UK maintains a firm distinction between foreign direct investment (FDI) and portfolio investment. FDI (active) occurs when shareholdings......
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Approximate Word Count: 2148
Approximate Pages: 9 (250 words per double-spaced page)
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