Taxation (International and Other Provisions) Act 2010 section 259E

Overview of Chapter

Section 259E provides an overview of Chapter 5, which sets out the rules for counteracting tax mismatches that arise when a hybrid entity makes payments or quasi-payments that result in a tax deduction without a corresponding inclusion of income by the recipient.

• Chapter 5 targets deduction/non-inclusion mismatches arising from payments or quasi-payments made by hybrid entities — entities that are treated differently for tax purposes in different jurisdictions
• The rules apply where the payer or a payee is within the charge to UK corporation tax, and the mismatch is counteracted by adjusting the corporation tax treatment of the payer or the payee accordingly
• Where the payer is within the charge to UK corporation tax, the primary counteraction applies to the payer; where only a payee is within the charge to UK corporation tax, the counteraction applies to the payee, but only if the mismatch has not already been fully addressed by equivalent rules in a territory outside the United Kingdom
• Key definitions used throughout the chapter — including "payment", "quasi-payment", "payment period", "relevant deduction", "payer", "payee", "hybrid entity", "investor", and "investor jurisdiction" — are found in sections 259BB and 259BE