Double Taxation Conventions

The Financial Secretary, Jane Kennedy MP, has announced details of the UK’s treaty negotiating priorities for the year to 31 March 2009.

The Financial Secretary said:

"I am pleased to announce the programme of work on double taxation conventions for the year to 31 March 2009. The UK has a comprehensive network of bilateral double taxation conventions and we are committed to maintaining and strengthening this network. These agreements help UK business and investors to remain competitive by providing them with a measure of certainty and stability in their tax affairs."

Below are details of negotiating priorities for the year to March 2009 and also reports on recent developments.

Details

The Government reviews the UK's Double Taxation Convention (DTC) priorities each year to ensure that the treaty network continues to meet the needs of the businesses and individuals receiving income from abroad. HM Revenue & Customs monitors the DTC networks of other countries and invites representations from business, individuals, representative bodies, other Government departments and others with an interest in this area. We use the results, balanced with an estimate of the resources available, to produce a schedule of work for the year ahead.

Programme to 31 March 2009

We plan to complete work on new DTCs with the Netherlands, Ethiopia, Libya and Thailand; and on Tax Information Agreements with Brazil, Jersey, Guernsey, Isle of Man and the British Virgin Islands.

We intend to progress negotiations with China, US, Spain, Belgium, Luxembourg and Hungary.

New talks

We have plans to commence negotiations with Australia, Canada, Israel and Spain. [We will make further announcements about DTC talks with other jurisdictions as and when arrangements are in place.]

Recent developments

The DTC between the UK and Macedonia, signed on 8 November 2006, entered into force on 8 August 2007. The text has been published as the Schedule to the Double Taxation Relief (Taxes on Income) (Macedonia) Order 2007 (Statutory Instrument 2007 No. 2127), copies of which can be obtained from The Office of Public Sector Information. The text of the Order can be accessed on the Internet.

In the UK the provisions of the Convention have effect from 1 April 2008 (for corporation tax purposes), and from 6 April 2008 (for income tax and capital gains tax purposes). In Macedonia, the provisions take effect from 1 January 2008.

A new comprehensive DTC between the UK and the Faroes was signed on 20 June 2007. The text has been published as the Schedule to the Double Taxation Relief and International Tax Enforcement (Faroes) Order 2007 (Statutory Instrument 2007 No. 3469), copies of which can be obtained from The Office of Public Sector Information. The text of the DTC is available on the Internet. This Convention is not yet in force.

A Protocol to the DTC between the UK and Switzerland was signed on 26 June 2007. The text has been published as the Schedule to the Double Taxation Relief (Taxes on Income) (Switzerland) Order 2007 (Statutory Instrument 2007 No. 3465), copies of which can be obtained from The Office of Public Sector Information. The text of the DTC is available on the Internet. This Protocol is not yet in force.

A new comprehensive DTC between the UK and France was signed on 19 June 2008. The text of the new Convention can be accessed on the Internet. The text will be laid as a Schedule to a Draft Order in Council for consideration by the House of Commons later this year.

A new DTC with France was originally signed on 28 January 2004. Changes to the tax systems in both countries meant that that Convention could not be taken forward and it has been replaced by the Convention signed on 19 June 2008 - which incorporates additional improvements over the 2004 text.

Agreements were also signed with the following countries. The texts of these agreements are also available on the Internet as draft Statutory Instruments as detailed below.

Bermuda (Tax Information Agreement signed on 4 December 2007):

Moldova (Comprehensive DTC signed on 8 November 2007):

New Zealand (Protocol to comprehensive DTC signed on 7 November 2007):

Saudi Arabia (Comprehensive DTC signed on 30 October 2007):

Slovenia (Comprehensive DTC signed on 14 November 2007):

Representations about our programme to 31 March 2009 are invited and should be sent to:

Jas Sahni
Customs & International (Tax Treaty Team)
Room 3.60
HM Revenue & Customs
100 Parliament Street
London
SW1A 2BQ

Email Jas Sahni

Notes

1. Double Taxation Conventions aim to eliminate the double taxation of income or gains arising in one State and paid to residents of another State. They do this by dividing the taxing rights that each treaty partner has under its domestic law over the same income and gains. They provide additional protection for taxpayers by specific measures combating discrimination in tax treatment. More generally, Conventions benefit the taxpayer by ensuring certainty of treatment and, as far as possible, by reducing compliance burdens. Double Taxation Conventions also serve an Exchequer protection role by including provisions to combat avoidance and evasion - not least by measures providing for the exchange of information between Revenue authorities.
2. There are more than 1,300 Double Taxation Conventions world-wide - the UK has one of the largest networks covering more than 100 countries. The UK has sought to encourage and maintain an international consensus on the appropriate tax treatment of cross border economic activity and thus promote international trade. The UK plays an important role in this field within the Organisation for Economic Co-operation and Development.

HM Revenue & Customs
August 2008