Authorised tax transparent funds will be introduced into the UK next year after regulators are granted more powers, the draft Finance Bill 2012 confirms.
The government announced that it would introduce the new structure in the 2011 budget and later explained that this would be achieved through regulation rather than legislation to create time for a more detailed consultation.
The draft Finance Bill 2012, which was published today, confirms that regulators will be granted powers to exempt qualifying funds from stamp duty and stamp duty reserve tax. No changes will need to be made to the Finance Act 2011.
In addition, the Corporation Tax Act 2010 will be amended to ensure these funds are not liable to pay corporation tax.
Tax transparent funds are being introduced to boost the international competitiveness of the UK asset management industry and reduce adverse tax consequences for investors in funds that are domiciled outside of the country.
Professional services firm KPMG says a transparent fund would be an appropriate vehicle for a master fund under the master/feeder structure permitted by Ucit IV.
This will allow feeder funds’ investors to gain the tax treaty benefits they are entitled, while permitting managers to benefit from economies of scale when funds are pooled, the firm adds.
Mark Hoban, the financial secretary to the Treasury, said in June: “The government … wants the UK to be the home for master funds and to do this we want to develop the most suitable vehicle working with industry to meet the real demand for a tax transparent vehicle in Britain.”
The government will publish a regulatory consultation document on tax transparent funds before the end of 2011 or at the start of 2012.
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