Midweek Tax News

The Finance Bill received Royal Assent on Wednesday 18 March, and has been enacted as Finance Act 2026.

The National Insurance Contributions (Employer Pensions Contributions) Bill returned to the Commons on 23 March, where all of the amendments proposed by the Lords were rejected. The Bill will return to the House of Lords today, 25 March.

On 19 March, the Government published a call for evidence requesting stakeholder input on the likely timescales to use remaining advance corporation tax (ACT) balances and the impact of removing the ACT regime entirely. This follows the Government’s announcement at Budget 2025 that it would consult on reform of the remaining ACT regime.

Advance Corporation Tax (ACT) was abolished in 1999; however transitional rules still allow companies with unrelieved ACT balances to use them subject to limitations known as the ‘shadow ACT’ rules. As previously reported, regulations were made earlier this month which repeal these ‘shadow ACT’ rules from 1 April 2026, with the aim of enabling utilisation of unrelieved surplus ACT by the small number of companies that still have remaining balances.

In the Call for Evidence, the Government now wants to understand the impact of phasing out the remaining ACT regime entirely. Although not confirmed policy, the Call for Evidence states that the Government is considering April 2029 as the potential date for abolition of the regime, noting that this will have given companies 30 years in total (including 3 years following the repeal of the shadow ACT rules) to use up their surplus ACT. Stakeholders are invited to give their views on the impact of this timing, the impact of losing any remaining balance and whether ACT balances have other value, for example as deferred tax assets. Responses are requested by 11 June 2026.

On 19 March, HMRC launched a new consultation on proposals to require close companies to report transactions with their participators. Under the proposals, close companies would be required to provide HMRC with details of transactions with their participators, including cash withdrawals, loans, debts, dividends, other distributions and transfers of assets to and from the company. The Government is also considering extending the new rules to the release or write off by close companies of loans to their participators. An exception to the reporting requirement may be available where the transaction details have already been reported to HMRC under the RTI system for employment income. The positioning of the consultation is clearly focused on small businesses, but as HMRC acknowledges, companies of any size can be close, even if “the vast majority” are small. The consultation is open until 10 June.

The Reserved Investor Fund (RIF) is a new UK-based investment fund vehicle which is structured as an unauthorised co-ownership contractual scheme. In March 2025, regulations were laid which set out a number of circumstances in which RIFs operators must make notifications to HMRC. On 19 March 2026, HMRC published an online form for RIF operators to notify HMRC of changes to their scheme or to make an exit notice, replacing the temporary pdf form which was published in March 2025. Online forms for operators to use to notify HMRC of entry into the regime and to provide accounting period information were published last year.

The European Commission has presented its proposal for ‘EU Inc.’, a single set of optional corporate rules intended to serve as the foundation for the EU’s proposed “28th Regime”. The aim is to provide a harmonised framework that can make it easier and quicker for businesses to start, operate and grow businesses across the EU. EU Inc. would not replace existing national company law systems; it would operate as an optional framework available to companies across the EU.

The proposal includes measures to streamline company formation and administration, including faster registration processes, simplified procedures and fully digital operations. It also provides for EU-wide employee stock option schemes.

Alongside the EU Inc. proposal, the Commission has adopted a Communication setting out existing and planned initiatives intended to complete or complement the 28th Regime in other policy areas. These include the previously proposed Head Office Tax (HOT) system, which would allow SMEs to apply the corporate tax rules of their home Member State, and the Business in Europe: Framework for Income Taxation (BEFIT), which aims to establish a single EU legislative framework for corporate taxation.

The EU Inc. proposal will now be considered by the European Parliament and the Council of the EU. The Commission has indicated that it is seeking agreement by the end of 2026.

On 19 March, the Australian Taxation Office (ATO) released its Decision Impact Statement following last year’s High Court decision in PepsiCo. In that decision, the High Court, by majority, found that payments made under enterprise bottling agreements by Australian companies in the PepsiCo group were not made as consideration for the use of IP and therefore were not royalties. In its statement, the ATO states that the outcome in PepsiCo was determined by the particular facts and circumstances of the appeals, and that in its view the decision does not limit the Commissioner's ability to challenge arrangements involving intellectual property (IP), including if rights are said to be embedded in payments for goods or services.

A global tax alert is available which sets out further discussion of the Decision Impact Statement and its implications.

In a webcast taking place at 09:00 GMT on Friday, 27 March, our panel will examine the latest updates on public Country-by Country Reporting in Australia and the EU, as well as looking at the latest transfer pricing developments and market trends in Belgium. If you would like to join this webcast, you can register here.

We have included links to a selection of our tax alerts below. Additional articles are available in our global tax alert library.

Cyprus: Cyprus has published broadened documentation requirements for dividend, interest and royalty payments made to associated non-resident companies to capture payments to low-tax jurisdictions, effective from 1 January 2026.

Cyprus: The Cyprus Tax Department has announced the 10-year government bond yield rates for various countries as of 31 December 2025, to be used for purposes of calculating the Notional Interest Deduction (NID) on equity for the 2026 tax year.

Bahamas: Form DMTT-24, which supports pre-registration with the Bahamas Department of Inland Revenue, must be completed and submitted by 31 March 2026 for each Bahamas entity that is part of an in-scope Multinational Enterprise (MNE) Group for Pillar Two purposes.

Chile: Chile has issued a ruling which reaffirms that payments for software distribution rights made by a Chilean entity to a US supplier are treated as business profits under the Chile-US tax treaty. 

Colombia: The Colombian Government has enacted additional temporary tax measures under the State of Economic, Social, and Ecological Emergency. This includes a net wealth tax for branches and PEs in Colombia, a new consumption tax on online gambling and “complementary tax normalisation” at a rate of 19%.

Ghana: The Court of Appeal of Ghana has held that corporate income tax refunds are governed by the Revenue Administration Act (not the VAT Act), and that taxpayers are entitled to refunds for VAT overpayments under the VAT Act, even if they do not qualify as exporters.

Qatar: Qatar has introduced a Trusted Entity concept for qualifying Qatar taxpayers, together with the Trusted Entity Service, which enables the direct application of withholding tax benefits under applicable double tax agreements.

Following the US Supreme Court’s decision in February to strike down the tariffs imposed under the International Emergency Economic Powers Act (IEEPA), businesses are evaluating how to respond and what comes next. This new article on ey.com discusses the five actions businesses can consider taking in order to manage uncertainty and maintain operational resilience.

The latest edition of PE Watch, EY’s summary of international developments regarding permanent establishments is available. This month’s edition covers new case law in the Netherlands to determine the appropriate method of calculating profits attributable to a PE. There is also coverage of the Netherlands’ clarification of the definition of a PE for Pillar Two purposes, and Germany’s draft PE guidance to update administrative practice.

The latest edition of EY’s monthly global report which summarises activity in the BEPS project, as well as country specific legislative and administrative activity, is now available.