Taxation (International and Other Provisions) Act 2010 section 167

Small and medium-sized enterprises: exceptions from exemption

Section 167 sets out two circumstances in which the transfer pricing exemption normally available to small and medium-sized enterprises under section 166 does not apply.

• An SME may voluntarily elect for the transfer pricing exemption not to apply for a particular chargeable period, and any such election is irrevocable once made.
• The exemption does not apply where the other affected person, or a party to a relevant transaction in a series, is resident in a non-qualifying territory at the time the provision is made or imposed.
• Residence in a non-qualifying territory removes the exemption even if that person is also resident in a qualifying territory.
• A person is considered resident in a territory if they are liable to tax there by reason of domicile, residence or place of management — but not if they are taxed only on income sourced in, or capital situated in, that territory.