Against the background of public pressure to levy more tax on multinationals operating in the digital economy or otherwise exploiting IP assets by making sales of products in the UK the government has imposed new rules (taking effect from the 28 June). First these have extended the scope of UK withholding tax to all payments that are royalties in OECD terms even those that are regular trading receipts from which expenses will be deducted and do not constitute pure income profits for the recipient. More controversially the rules have been extended to deem payments made by an overseas affiliate for the right to use the IP to have a UK source in order to impose that withholding tax in the UK. It is surprising that there has not been more of a reaction to this radical new regime so far. All the signs ...
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