An overseas lessee might be able to gain a tax-timing
advantage in their own state. It is, for example, not unusual for
other states to give the equivalent of capital allowances to a
finance lessee. In fact, this is more common than giving capital
allowances to the legal owner of a finance-leased asset.
Where the lessee is able to claim the benefit of the
equivalent of capital allowances it gains the benefit of tax-timing
advantages twice. This is known as ‘double-dipping’ and
is a common tool of the international tax planner. Multiple dips
are possible, usually using complex lease structures, with each dip
adding value to the ultimate lessee, at the expense of the
Exchequers in the lessors’ or lessees’ fiscs.
See also
BLM31000 for further guidance on
overseas leasing.
