Paragraph 8

Section 410 (interpretation of section 409) is amended as follows.

In subsections (3)(b) and (4)(b), after “resident” insert “ for tax purposes ”.

After subsection (4) insert—

“(4A)

The non-qualifying territory condition applies if C is a company; and the non-qualifying territory condition is that C is—

(a)

resident for tax purposes in a non-qualifying territory at any time in the relevant period, or

(b)

effectively managed in a non-taxing non-qualifying territory at any such time.”

In subsection (5), for the definition of “resident” substitute—

““resident for tax purposes” means liable, under the law of the non-qualifying territory, to tax there by reason of domicile, residence or place of management, and”.

After that subsection insert—

“(5A)

For the purposes of this section, a non-qualifying territory is “non-taxing” if companies are not under its law liable to tax by reason of domicile, residence or place of management.”