Withholding Tax

UK Royalties Withholding Tax – Consultation

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Source: HMRC Press Release, 1 December 2017

This consultation relates to the circumstances in which royalties and other types of payment made to connected persons not resident in the UK have a liability to income tax.

The UK government will introduce legislation in Finance Bill 2018-19 that broadens the circumstances in which certain payments made to non-UK residents have a liability to income tax.

These changes will have effect from April 2019. The consultation focuses on the design of that legislation.

The government welcomes comments from those who would be affected by these changes, including companies, advisors and representative bodies.

The consultation runs from 1 December 2017 to 23 February 2018.

Details of the Consultation here

 

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Factoring Withholding Tax into the Transfer Pricing of Services.

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This note considers the UK Transfer Pricing implications of Withholding Tax charged on fees for technical services, using India as an example.

WHT is relevant to international companies doing business with associated or independent enterprises in India, even if they don’t have a presence or permanent establishment there. India isn’t the only State which applies a WHT on fees for services, China is another and there are many more. It is a one-way street from the UK viewpoint because UK domestic law does not award a taxing right if the positions were reversed.

It’s a complex area, with many variables, and the application of the rules is dependent on the specific facts & circumstances of each case. The circumstances under which WHT might actually lead to a TP adjustment may be limited, but they can’t be ignored.
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