Proposed UK tax changes will affect Irish captives

By Rosie Hawkins, London

TAX changes planned by the UK government mean insurers with captives in Ireland may no longer be entitled to automatic exemption from the UK’s controlled foreign company (CFC) rules, which allow them a reduction in tax on profits. The move follows changes to the rate of corporation tax in Ireland, which, the government believes, mean it is no longer appropriate for firms operating there to qualify for automatic exemption from the UK’s CFC rules. The amendments, first announced in July, were put to parliament on Friday and mean insurers with captives based in Ireland, but principally controlled by businesses in the UK, will be liable to a charge for accounting periods beginning on or after October 11, 2002.