§ Mr. GryllsTo ask the Chancellor of the Exchequer if he has any plans to implement section 812 of the Income and Corporation Taxes Act 1988; and if he will make a statement on unitary tax.
§ Mr. Norman LamontSome two years ago Her Majesty's Government announced that they were prepared to defer initiating action under what is now section 812 of the Income and Corporation Taxes Act 1988 (previously section 54 of the Finance Act 1985) in recognition of the progress that had been made towards resolving the unitary tax issue. The Government further made it clear that if it became necessary to take action after 31 December 1988, it would not apply to dividends paid on or before that date.
The Government believe that progress has been made in the last two years but that problems remain, in particular the election fee which companies have to pay in order not to be subject to worldwide unitary tax. It proposes to review the situation jointly with the United States Treasury later this year. If it became necessary to take action on or after 31 December 1989 this would not apply to dividends paid on or before that date.