§ Mr. BurnsTo ask the Chancellor of the Exchequer what regulations he intends to introduce to implement the legislation for the lending of overseas securities and for payments of manufactured overseas dividends on such securities.
§ Mr. DorrellRegulations are being laid today to bring into effect the new legislation on payments of manufactured overseas dividends in section 58 and schedule 13 of the Finance Act 1991. Further regulations will shortly be made under the provisions contained in schedule 23A of the Income and Corporation Taxes Act —introduced by schedule 13 of the Finance Act 1991—to set out the arrangements for accounting for tax on manufactured overseas dividends. Regulations will also be made at the same time to bring into effect, for overseas securities, the amendments to the stock lending rules contained in section 57 of the Finance Act 1991.
The amendments to the stock lending rules will allow lending chains to contain more than three parties without tax charges arising on disposals of securities from one party to the next. This relaxation is designed to enhance the liquidity of the London market in overseas securities and the role of London as a major financial centre.
The arrangements for accounting for tax on manufactured overseas dividends have been discussed in detail with market representatives over the past two years. They differ from the proposals outlined by my predecessor in the Committee stage debate on schedule 13—introduced as schedule 12—of the 1991 Finance Bill. However, the new arrangements, like those originally envisaged, aim to balance freedom for the markets with adequate protection for the Exchequer against the main risks of tax loss.