The Income Tax (Trading and Other Income) Act 2005 (Amendments to Chapter 2A of Part 5) Regulations 2019 (S.I. 2019/1452) were made on 4 November 2019.
The Regulations amend existing legislation "Offshore Receipts in respect of Intangible Property" that taxes income arising from brands, patents and copyrights received by persons resident in low tax jurisdictions where the income is referable to the sale of goods or services in the United Kingdom.
The main amendments of the Regulations are:
- the introduction of modifications to the definition of UK sales and residence;
- the creation of an exception for sales made by third parties where the intangibles make an insignificant contribution to the UK sales;
- the creation of exemptions for: (i) companies resident in certain jurisdictions with which the United Kingdom does not have a double taxation agreement; (ii) tax transparent entities resident in a low tax jurisdiction and 100% held by residents in that jurisdiction; and
- the introduction of a provision to avoid double taxation when the same income is taxed twice in respect of related entities.
The Regulations came into force on 5 November 2019.