INCOME TAX (Hansard, 22 March 1972)

§ The Financial Secretary to the Treasury (Mr. Patrick Jenkin)

I beg to move, That the Non-Residents' Transitional Relief from Income Tax on Dividends (Extension of Period) Order 1972, a draft of which was laid before this House on 25th February, be approved. I believe that it would be for the convenience of the House if we took at the 1647 same time the other order, the Transitional Relief for Interest and Royalties Paid to Non-Residents (Extension of Period) Order. I hope that that is acceptable.

The House will be familiar now with orders in this form. They extend for a further year certain double taxation arrangements connected with the introduction of corporation tax in 1965. The dividends order restricts the rate of income tax deductible from dividends going to certain territories overseas to the so-called "mirror-image" rate. The interest and royalties order provides that certain payments of interest and royalties which normally fall to be treated as distributions should not be so treated when going overseas to certain territories in certain circumstances.

This should be the last time that I shall have to trouble the House with orders under these provisions. Under the new corporation tax system which my right hon. Friend the Chancellor of the Exchequer has announced, the need for these reliefs will disappear almost entirely, and we have decided, therefore, that they 1648 should be brought to an end with effect from April, 1973, when the new system comes into operation. The importance of these reliefs has declined considerably, but they should remain in force in the ensuing year. I hope, therefore, that the House will extend them for this further year.