15(1)After section 803 of the Taxes Act 1988 insert—
“803AForeign taxation of group as a single entity
(1)This section applies in any case where, under the law of a territory outside the United Kingdom, tax is payable by any one company resident in that territory (“the responsible company”) in respect of the aggregate profits, or aggregate profits and aggregate gains, of that company and one or more other companies so resident, taken together as a single taxable entity.
(2)Where this section applies, this Part shall have effect, so far as relating to the determination of underlying tax in relation to any dividend paid by any of the companies mentioned in subsection (1) above (the “non-resident companies”) to another company (“the recipient company”), as if—
(a)the non-resident companies, taken together, were a single company,
(b)anything done by or in relation to any of the non-resident companies (including the payment of the dividend) were done by or in relation to that single company, and
(c)that single company were related to the recipient company, if that one of the non-resident companies which actually pays the dividend is related to the recipient company,
(so that, in particular, the relevant profits for the purposes of section 799(1) is a single aggregate figure in respect of that single company and the foreign tax paid by the responsible company is foreign tax paid by that single company).
(3)For the purposes of this section a company is related to another company if that other company—
(a)controls directly or indirectly, or
(b)is a subsidiary of a company which controls directly or indirectly,
not less than 10 per cent. of the voting power in the first-mentioned company.”
(2)This paragraph has effect in relation to any claim for credit, under any arrangements, in respect of underlying tax in relation to a dividend paid on or after 21st March 2000 by a company resident outside the United Kingdom to a company resident in the United Kingdom.