Draft Double Taxation Relief and International Tax Enforcement (Peru) Order 2025
Draft Double Taxation Relief and International Tax Enforcement (Romania) Order 2025
Draft Double Taxation Relief and International Tax Enforcement (Andorra) Order 2025
Draft Double Taxation Relief and International Tax Enforcement (Portuguese Republic) Order 2025
(1 day, 6 hours ago)
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The Exchequer Secretary to the Treasury (Dan Tomlinson)
I beg to move,
That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Peru) Order 2025.
The Chair
With this it will be convenient to consider the draft Double Taxation Relief and International Tax Enforcement (Romania) Order 2025, the draft Double Taxation Relief and International Tax Enforcement (Andorra) Order 2025 and the draft Double Taxation Relief and International Tax Enforcement (Portuguese Republic) Order 2025.
Dan Tomlinson
It is a pleasure to serve on this Committee with you as Chair, Mr Swayne.
The orders before the Committee give effect to the double taxation conventions, or DTCs, with Andorra, Peru, Portugal and Romania. Like all DTCs, these agreements will provide tax certainty to businesses and investors by removing double taxation and, importantly, without creating opportunities for the avoidance of tax. In doing so, they will remove barriers to cross-border trade and investment, support growth, and provide a clear and fair framework for taxing businesses that invest and trade across borders. That will benefit businesses and the economies of both the UK and our respective treaty partners.
The DTCs are based mainly on the OECD model tax convention, which contains a set of internationally agreed principles and standards that make them easier for businesses to understand and tax administrations to apply. Those standards ensure that DTCs are not used to avoid or evade tax. They include a statement to that effect in the preamble, and are clear that it is not a purpose of a DTC to create opportunities for tax evasion and avoidance.
The DTCs include a principal purpose test that denies treaty benefits in case of abuse. They also allow for the exchange of information between the UK and its treaty partners to facilitate tax transparency. Other anti-avoidance rules in the new treaties include a tie-breaker provision for determining corporate residence based on agreement between the competent authorities of the treaty partners. The orders include dispute resolution provisions, which provide that where a taxpayer considers that the DTC has not been applied correctly, they can present their case to either tax authority, allowing both countries to work together to resolve the issue.
Together, those features strengthen our collective defences against tax avoidance and evasion while supporting cross-border trade, investment and mutual growth. I commend all the orders to the Committee.
Gareth Davies (Grantham and Bourne) (Con)
It is a great pleasure to see you in the Chair, as always, Sir Desmond. It is also a pleasure to serve on this Committee on behalf of His Majesty’s official Opposition and to see the Minister in his place for the first time in a Delegated Legislation Committee. I wish him luck for this one and the many more to come—Ministers spend a lot of time in DLCs, as he will come to realise.
As the Minister pointed out, the orders before the Committee give effect to the double taxation conventions negotiated and updated with Andorra, Peru, Portugal and Romania. DTCs prevent the double taxation—as the Minister was saying—of income or gains from cross-border activity, combat tax avoidance through the concealing of assets offshore, and promote trade and investment between the signatories.
I understand that these agreements are based on OECD and G20 recommended standards on base erosion and profit shifting to create international rules to protect against tax avoidance. Negotiating and updating such agreements are fairly routine; the previous Government negotiated literally dozens of new DTCs between 2010 and 2024. It is one of the regular ongoing duties of the Government and Treasury Ministers, and I am therefore pleased to see these agreements come into force today.
These orders give effect to new agreements with Andorra and Peru, as well as updating and replacing existing agreements with Romania and Portugal from 1977 and 1969, respectively. These agreements cover double taxation with regard to capital gains tax, corporation tax and income tax, as well as those taxes of a similar nature in Andorra, Peru, Portugal and Romania.
Historically, these agreements have passed through the House with little disagreement. The Minister will be pleased to know that I will not be breaking precedent today. However, I have two little questions for him, which I am sure he will find incredibly straightforward—and if not, the answer will be in his pack. First, can the Minister provide an estimate of the net impact to the Exchequer in terms of tax revenue as a result of these measures directly?
As they say in Peru, it takes two to tango. Therefore can he update the House on the ratification process of these orders in the Parliaments of Andorra, Peru, Portugal and Romania? It is a pretty straightforward question because obviously we need both Parliaments to enact these measures. Can the Minister clarify what the process is, and whether the ratification process in those countries is running in conjunction with the passage of the draft orders in this House?
Lincoln Jopp
I have just been checking my notes, and I think that the Minister may have inadvertently referred to you, Sir Desmond, as “Mr Swayne”. I thought it might be good to offer him the opportunity to correct the record, and show that he did not mean any disrespect to the Chair.
Dan Tomlinson
I thank the hon. Member for giving me the chance to correct the record that we have a Sir in the Chair today—Sir Desmond Swayne. I am very grateful for your chairmanship, Sir Desmond.
On the impact of these different DTCs, trade with Andorra is only £93 million a year, so the impact will be relatively small for some of these measures. The impact will be larger with both Portugal and Romania as they are already very significant trading partners and we trade a similar amount with both.
On the hon. Gentleman’s second question, Romania has ratified this already and Peru, Andorra and Portugal are expected to do so by the end of the year.
Is this the moment where I conclude, or do I sit down now?
Dan Tomlinson
In closing, Sir Chair, the orders before the Committee implement DTCs between the United Kingdom, Andorra, Peru, Portugal and Romania. The conventions will ensure that we have a modern DTC in place with all four of these countries, which will provide a stable foundation for trade and investment to grow, while at the same time making it harder to avoid taxes here in the United Kingdom. I am grateful to all hon. Members—Sirs and non-Sirs—for their contributions to the debate.
Question put and agreed to.
Draft Double Taxation Relief and International Tax Enforcement (Romania) Order 2025
Resolved,
That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Romania) Order 2025.—(Dan Tomlinson.)
Draft Double Taxation Relief and International Tax Enforcement (Andorra) Order 2025
Resolved,
That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Andorra) Order 2025.—(Dan Tomlinson.)
Draft Double Taxation Relief and International Tax Enforcement (Portuguese Republic) Order 2025
Resolved,
That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Portuguese Republic) Order 2025.—(Dan Tomlinson.)