INTM620320 - Offshore Receipts in respect of Intangible Property (ORIP): Exemptions: Company resident in specified territory (“listed territory”)

ITTOIA05/Ch2A/S608JA

This exemption applies to companies resident in specified non-full tax treaty territories who would otherwise be liable to tax under Chapter 2A on their UK-derived amounts. The persons affected by ORIP are generally companies, and to avoid the complexities of dealing with differences between rules for corporates and other persons, the exemption is restricted to companies rather than persons generally. “Company” follows the definition in s992 ITA07 and s863(2)(c) ITTOIA05.

The exemption is only available where the following conditions are met:

  • The company must be resident in the specified territory as defined by s608D(2)(a) - that is by reason of domicile, residence or place of management.
  • The company must be chargeable to tax in that territory in respect of UK-derived amounts arising in the tax year. Where the territory taxes on a remittance basis, the UK-derived amounts must be remitted or otherwise received and charged in the tax year for the exemption to apply.
  • The company should not be involved in an arrangement the main purpose or one of the main purposes of which is to obtain a tax advantage for any person.
  • If the specified territory offers “Designer Tax Provisions” as defined in s608Z, the company must not use these in respect of the UK-derived amounts (INTM620795).

All conditions above must be met throughout each tax year in which a charge would otherwise arise. The exemption applies automatically and does not need to be made by election.

Further regulations for this exemption from Chapter 2A may be made to specify certain territories to which this exemption will apply. Those regulations may have retrospective effect. It is intended that territories specified in any such regulations will be those where, in broad terms, the territory’s business taxation framework is consistent with the policy aims of Chapter 2A, and which are in scope of the Chapter 2A charge because they do not currently have an appropriate double tax agreement with the UK.

The Commissioners have the power to add and remove territories to or from this list by regulations.

Example 1

Company A has UK-derived amounts arising to it and is resident in a specified territory throughout the tax year. Company A is not subject to any designer tax provisions, nor is it involved in arrangements the main purpose of which is to obtain a tax advantage for any person. The specified territory in question taxes certain income on a remittance basis, and Company A remits its UK-derived amounts in full and they are charged to tax in the tax year. Company A satisfies the requirements of the exemption.