The UK Treasury said it will introduce authorised tax-transparent funds via secondary legislation – a move that should allow a better consultation process with the industry.
Mark Hoban MP, Financial Secretary to the Treasury, made the announcement at the Investment Management Association (IMA) Chairman’s Dinner last week.
Julie Patterson, director of authorised funds and tax at the IMA, welcomed the use of secondary rather than primary legislation.
“It will enable a more efficient consultation process with the industry on the technical details of the regime. Secondary legislation will also allow for refinements to be made to the rules should any snagging points come to light when the new funds are launched from 2012,” she said.
The Treasury announced in November 2010 that the UK will launch a new authorised fund regime for a tax-transparent vehicle. The use of secondary legislation is an alternative to primary legislation in the form of provisions in next year’s Finance Bill to amend the Financial Services & Markets Act.
The issue is related to the Ucits IV directive and the ‘master-feeder’ funds provisions within it. These feeder funds in different domiciles will invest in the same master fund, which will allow a single portfolio of assets to be offered in multiple jurisdictions and for different types of investors.
Patterson said: “It is essential that the UK takes advantage of the Ucits IV directive and becomes a domicile of choice for master-feeder structures. To enable it to complete, there needs to be a tax-transparent vehicle. A tax-transparent master allows each feeder to access double tax treaty benefits at the correct rate for the investors in those feeders.”
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