On 15 March the Chancellor, Jeremy Hunt, released his Spring Budget 2023. With the Autumn Statement 2022 having to focus on the need to restore economic stability, in light of the UK political turmoil at that time, this was billed as a Budget for growth, encouraging business investment in the UK. The Government’s stated aim is to create a competitive, pro-business tax regime and the headline announcement – certainly going some way to achieving this – was on capital allowances.

In this newest episode of Baker McKenzie’s Global Tax Policy Video Series, Kate Alexander, Miles Humphries and Nick Evans discuss recent UK perspectives on Pillar Two. They also discuss what UK businesses are doing now to prepare for implementation of the proposed Pillar Two changes, despite a welcome delay to the UK’s implementation schedule.

TMT companies are often the first to develop innovative solutions and to face increasingly sophisticated regulation of key technologies they develop. As such, they have a unique opportunity to shape many areas including data strategies aligned to I&D, the future of remote work, and due diligence requirements for supply chains. A focus on data ethics underscores companies’ management of tangled data regulations and obligations as stewards of data. Additionally, TMT companies will also continue to develop and support innovative technologies to access and store renewable energy.

In the midst of regulatory developments, increased enforcement and greater coordination amongst customs and transfer pricing regulators, businesses need to stay abreast of the latest considerations with respect to the interaction between transfer pricing and customs valuation within their supply chain.

In the session on 23 June, senior tax and transfer pricing professionals will share their observations on the latest customs and transfer pricing developments in the EMEA region and provide practical guidance on how to mitigate risks on these issues.

On 11 January 2022, the UK government published a consultation on the implementation of the Pillar Two regime into UK domestic law. This follows the publication of the GloBE Model Rules by the OECD on 20 December 2021. The consultation is open until 4 April 2022, with the expectation that draft legislation will be published during the summer. The consultation indicates that an Income Inclusion Rule (IIR) would take effect in UK law from 1 April 2023, with the Undertaxed Profit Rule (UTPR) following on 1 April 2024.

The emergence and subsequent spread of the Delta variant has led several countries, most notably the United States, into adopting more stringent health and safety protocols. On 29 July 2021, President Biden declared that the US government would be imposing vaccination requirements in certain cases and offering additional incentives for its citizens to be vaccinated. Following this announcement, TMT Talk revisits the important legal aspects of vaccinations, as they apply to the TMT sector.

The inaugural ‘Tax Day’ on 23 March saw a range of announcements on the future of UK tax compliance. One of most significant measures is the re-launch of the proposal to require Large Businesses to notify HMRC of uncertain tax treatments that they have adopted.

This second consultation addresses the criticisms expressed when the proposal was first put forward during 2020. The original trigger of HMRC “may not agree with/is likely to challenge” the treatment adopted by a taxpayer has been replaced with eight separate triggers designed to apply the reporting requirement on a more objective basis.

The revised proposal looks a step in the right direction, but there remain a number of practical concerns to be ironed out. We would recommend that Large Business taxpayers continue to engage with the proposal to ensure it is implemented on proportionate and practicable terms.

The intention is for the requirement to apply to returns that are due to be filed from 1 April 2022 onwards. Therefore, for annual taxes such as corporation tax, this is a live issue that affects the current financial period for the vast majority of taxpayers.

The inaugural ‘Tax Day’ on 23 March saw a range of announcements on the future of UK tax compliance. One of most significant measures is the re-launch of the proposal to require Large Businesses to notify HMRC of uncertain tax treatments that they have adopted.

This second consultation addresses the criticisms expressed when the proposal was first put forward during 2020. The original trigger of HMRC “may not agree with/is likely to challenge” the treatment adopted by a taxpayer has been replaced with eight separate triggers designed to apply the reporting requirement on a more objective basis.

The revised proposal looks a step in the right direction, but there remain a number of practical concerns to be ironed out. We would recommend that Large Business taxpayers continue to engage with the proposal to ensure it is implemented on proportionate and practicable terms.

The intention is for the requirement to apply to returns that are due to be filed from 1 April 2022 onwards. Therefore, for annual taxes such as corporation tax, this is a live issue that affects the current financial period for the vast majority of taxpayers.

As TMT businesses plan for 2021 they are building on the opportunities and challenges arising from 2020. Many bold decisions were taken by TMT players in 2020 to protect their workforces and to ensure that they continue to be able to deliver technology, connectivity and digital transformation across sectors. Significant…

HMRC has published its response to the recent consultation on the operation of the UK hybrid-mismatch rules along with draft legislation to amend the rules in various respects. Although the consultation document identified discrete areas where HMRC were seeking views, HMRC also welcomed broader feedback on the current operation of legislation to the extent it was not operating proportionately or as intended. 

HMRC’s proposals only offer partial solutions to many of the issues identified by stakeholders. In particular, US multinational groups may continue to suffer material disallowances under the double deduction rules in some common (and benign) commercial structures. It is clear from our recent discussions with HMRC that they have endeavored strike a balance between fixing some of the issues with the current legislation while ensuring the rules cannot be manipulated. The remaining pitfalls within the legislation which continue to lead to economic double taxation are therefore deliberate policy choices that HMRC intends to stick by irrespective of the harmful consequences for some taxpayers.