White & Case Advises on UK Government's Autumn Statement Proposal for New UK Withholding Tax Exemption for Private Placements
Global law firm White & Case LLP has advised HM Treasury (on a 'no fee' basis) on the government's proposal, announced by Chancellor George Osborne during his Autumn Statement, for a new UK withholding tax exemption for interest payments on privately placed debt.
The White & Case tax practice in London worked closely with HM Treasury and HM Revenue & Customs in advising HM Treasury on its work to design and craft this proposed new tax exemption, which aims to encourage the growing private placement market in the UK and to facilitate greater access to funding for UK businesses.
"This new UK withholding tax exemption will mean that UK borrowers can access a wider range of financing, thereby making their commercial arrangements less dictated by UK withholding tax constraints," said London-based White & Case counsel Prabhu Narasimhan, who co-led the team which worked closely with HM Treasury and HM Revenue & Customs on this new tax exemption. "This is another step taken by the UK government towards its stated objective of making the UK the most competitive corporate tax jurisdiction in the G-20."
For cross-border borrowing, UK withholding tax, although technically the tax of the lender (receiving the interest payments), has as a matter of contractual risk allocation been borne by the borrower. "This has been seen as one impediment to the development of a successful private placement market in the UK, but this new tax exemption will certainly give impetus to the growth of a robust UK private placement market that attracts global investors" said Prabhu. The Investment Management Association has already announced that, as a result of the proposed exemption, six leading asset managers intend to make investments totalling around £9 billion in private placements and other direct lending to UK companies.
London-based White & Case partner Peita Menon, who co-led the team, said: "The fact that HM Treasury and HM Revenue & Customs sought the counsel of the Firm's London tax practice to advise in the design of a new UK tax exemption that will have far reaching impact for UK business is a testament to the reputation and experience of our tax lawyers. It's another example of the depth and capability of our tax practice."
Globally, the White & Case tax practice advises corporations, funds, financial institutions, closely-held companies, government entities and sovereigns. As well as forming a significant stand-alone tax practice that includes legislative and policy advice, the Firm's tax lawyers also support other White & Case practices on all types of corporate transactions.
The White & Case team in London which advised on the new UK tax legislation was co-led by partner Peita Menon and counsel Prabhu Narasimhan (who has been promoted to partner from January 1, 2015) and included associate Laura Hoyland.
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