1. Taxation Update 18 October 2005

2. Taxation Update Tax strategy Income derived from land & property Corporate income tax Distributable Profits Charge International issues

3. Taxation Strategy Background International considerations “0/10”

4. 10% Rate for Companies Licensed banks, banking business Post-importation or wholesaling of goods by branches and subsidiaries of non-resident companies Income from land and property Companies that elect to pay 10%

5. Company Rates of Tax 2%- Banks’ income from reserves 0%- General rate for companies 20%- Understated income

6. Timing April 2006 0/10 Distributable Profits Charge April 2007 Exempt/international companies repealed Land transactions New income tax regime for companies

7. Income Derived from Land Consultation Document Introduction of schedular system 10% rate on the schedule Legislation for property development income

8. Income Derived from Land schedular system includes Rental income Property development Trading New charging provision Other e.g. mineral extraction

9. Income Derived from Land Property development income Changes to Part 3 IT (Amendment) Bill 2005 5 year ownership Principal private residence exemption Disposal by a non-resident Development levy

10. Company Income Tax Timing Consultation Legislation Commencement Basis of assessment Accounts period basis Computation

11. Company Income Tax Pay and file Within 9 months from end of period of account 12 month review period Discovery (S84A ITA 1970) Reduction request (S107 ITA 1970)

12. Company Income Tax Compliance in a zero rate regime Default assessments Flat-rate penalties Investigation rate of tax

13. Company Income Tax Transition Option 1 (Corporate Tax Working Party) 5 years Move payment dates Option 2 1 Year Taper relief Other Options

14. Distributable Profits Charge Income Tax (Amendment)(No.2) Bill 2005 Consultation DPC “Big Guide” Regulations early 2006

15. Distributable Profits Charge What is a distributing company? Distributes 55%/100% 10% tax paying companies Tax exempt bodies Companies where members are unable to benefit from a distribution PLC traded on recognised stock exchange

16. Distributable Profits Charge Timing of distributions 3 year averaging Current/ future years Resident interest Look through

17. Distributable Profits Charge Distributable Profits Charge The charge Only for “non- distributing company” 55% x 18% trading/100% x 18% non- trading Resident interest

18. Distributable Profits Charge Co A Resident Non - Resident Resident 50% 10% Non- Resident 90%

19. Distributable Profits Charge Payment Treatment of interim distributions Interest charge for late payment

20. Distributable Profits Charge The Calculation Change resident/non-resident shareholding Double taxation relief Foreign income taxed at more than 18% Foreign income taxed at less than 18% Groups

21. International Issues TIEAs Netherlands Others EU EUSD OECD

22. Taxation Update QUESTIONS ?