The Treasury’s proposals for reforming the way UK-based companies’ foreign profits are taxed are a “key step forward for the insurance sector, particularly the London market,” PwC has said.
Companies will no longer be taxed on profits arising from economic activities genuinely undertaken offshore, in a shake-up of the Controlled Foreign Company (CFC) rules announced yesterday.
Colin Graham, insurance tax partner at PwC, said: “The proposals are a key step forward for the insurance sector, particularly the London market, as the Government appears to recognise London’s position as a leading international insurance centre.
“The plan to broaden the CFC exemption for reinsurance operations appears to be a particular win for the industry and recognises the crucial role the London market plays in the placing of international (re)insurance risk. Companies that are headquartered offshore should pay close attention to the positive developments proposed.”
He added: “Despite the clear signs of progress, there is still a significant lack of detail and the industry only has a short window to respond and influence the final rules. The news the low tax finance exemption may not be extended to insurance groups is a potential blow to the industry but Government have said they will consider this further.”
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