Kennedy Announces UK Tax Treaty Priorities

by Robert Lee, Tax-News.com, London

20 August 2008

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

The Financial Secretary stated on Monday that:

"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."

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. Also, 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.

During the programme to 31 March, 2009, the government plans 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. It also intends to progress negotiations with China, US, Spain, Belgium, Luxembourg and Hungary.

The government plans to commence new negotiations with Australia, Canada, Israel and Spain, and will make further announcements about DTC talks with other jurisdictions as and when arrangements are in place.

Kennedy's announcement also stated that the DTC between the UK and Macedonia, signed on 8 November, 2006, entered into force on 8 August, 2007. 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.

In other recent developments: a comprehensive DTC between the UK and the Faroes was signed on 20 June, 2007; a Protocol to the DTC between the UK and Switzerland was signed on 26 June, 2007; and a new comprehensive DTC between the UK and France was signed on 19 June, 2008.

A new DTC with France was originally signed on 28 January, 2004. However, changes to the tax systems in both countries meant that that Convention could not be taken forward and it has been replaced by the Convention signed on 19 June, 2008 - which incorporates additional improvements over the 2004 text.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: 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); and Slovenia (Comprehensive DTC signed on 14 November, 2007).

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