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Double tax treaties review

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The CIOT has responded to HMRC’s review of the priorities for the UK’s network of double taxation agreements for 2022/23.

The CIOT welcomes confirmation that, following Brexit, HMRC will continue to prioritise renegotiation of European double taxation treaties (DTTs) to try to replicate the benefits of the interest and royalty and parent and subsidiary directives. It also reiterates its position that UK companies would benefit from a new addition to article 13 of the OECD model for treaties with EU/EEA members that would extend the merger directive bilaterally. The CIOT’s view is that the DTTs with Germany and Italy are the most important to seek to renegotiate, due to the size of their economies.

The CIOT also notes:

  • the government should step up the UK’s policy for seeking to negotiate mandatory binding arbitration provisions in its treaty network, to reflect the UK’s support of such provisions in the discussions around action 14 of the BEPS project and the changes to the DTT landscape as a result of the OECD multilateral instrument (MLI). This work will become increasingly important as the OECD pillar 2 model rules begin to be adopted across the globe;
  • additional guidance in respect of the MLI’s new articles (and in particular the principal purpose test and anti-fragmentation provisions) from the UK’s treaty partners would be useful, so the CIOT welcomes anything the UK can do to encourage this;
  • the synthesised texts of the DTTs that have been amended as a result of the ratification of the MLI are very helpful, and that HMRC has managed to produce these more quickly than other jurisdictions; and
  • suggestions from its members around aspects of the UK’s existing DTTs that are uncompetitive when compared with agreements those treaty partners have made with other countries.
Issue: 1562
Categories: News