ANNEX 1:: MINOR CHANGES IN THE LAW Change 7: Double taxation relief: corporation tax: credit relief: royalty income: section 47
This change brings into line with practice the law concerning DTR on royalty income by way of credit against corporation tax.
Section 798B(3)(a) of ICTA provides that for the purposes of DTR by way of corporation tax, royalty income arising in more than one jurisdiction (other than the United Kingdom) in a year of assessment in respect of an asset is to be treated as income arising from a single transaction, arrangement or asset for the purposes of section 798A(2) of that Act.
But unlike income tax, corporation tax is not charged for years of assessment. Corporation tax is charged on profits which have been calculated for an accounting period of a company: see section 8 of CTA 2009.
Section 47 therefore refers to an accounting period rather than a year of assessment.
This change has no implications for the amount of tax paid, who pays it or when. It affects (in principle but not in practice) only administrative matters.