• Part 16: Credit for Tax Losses

    • Article 93 - Policy Statement on Credit for Tax Losses

      Where the conditions of this Part are fulfilled, a QFC Entity which is an LLC may be entitled to a reimbursement in respect of certain tax losses.

      Inserted (as from 18th June 2014)

    • Article 94 - Credit for Tax Losses

      (1) Subject to the provisions of this Part, including Article 97, a QFC Entity is entitled to make a claim under Article 96 for payment of a tax credit in respect of a Reimbursable Tax Loss for a Reimbursable Accounting Period if it meets each of conditions A to E set out in this Article throughout the relevant Reimbursable Accounting Period.
      (2) The amount of the tax credit in respect of a Reimbursable Tax Loss to which a QFC Entity is entitled to make a claim is determined in accordance with Article 95 and Article 96.
      (3) Condition A is that the QFC Entity is an LLC.
      (4) Condition B is that the QFC Entity carries on a Licensed Activity.
      (5) Condition C is that the QFC Entity has at least 3 full-time employees.
      (6) Condition D is that the QFC Entity meets the conditions set out in the Tax Rules (Tax 15).
      (7) Condition E is that the QFC Entity has not elected for special exempt status in respect of the Reimbursable Accounting Period or for its Chargeable Profits to be charged to tax at the Concessionary Rate.
      Inserted (as from 18th June 2014)

    • Article 95 - Reimbursable Tax Losses

      (1) A Reimbursable Tax Loss is a tax loss calculated in accordance with Article 27 and as adjusted by this Article.
      (2) In computing a Reimbursable Tax Loss of a QFC Entity, no deduction shall be available in respect of—
      a) expenses which are not shown to the satisfaction of the Tax Department to have been incurred in the State;
      (b) depreciation of tangible fixed assets;
      (c) amortisation of intangible fixed assets;
      (d) interest incurred on indebtedness; and
      (e) any Distribution.
      Inserted (as from 18th June 2014)

    • Article 96 - Payment of Reimbursable Tax Losses

      (1) For a QFC Entity to receive a payment of a tax credit in respect of a Reimbursable Tax Loss for a Reimbursable Accounting Period, it must make a claim in writing to the Tax Department within 6 months from the end of the Reimbursable Accounting Period to which the Reimbursable Tax Loss relates. The claim must specify the Reimbursable Accounting Period in respect of which it is made.
      (2) The amount of the tax credit to which a QFC Entity is entitled in respect of a Reimbursable Tax Loss for a Reimbursable Accounting Period is the amount stipulated in the Tax Rules (Tax 15).
      (3) If the Tax Department determine that a QFC Entity is entitled to a payment of a tax credit under this Part, it shall pay the amount of such tax credit to the QFC Entity within 6 months from the date a return is filed by that QFC Entity for the relevant Reimbursable Accounting Period under Article 109.
      (4) A payment of a tax credit under this Part shall not be taken into account in computing the Chargeable Profits of a QFC Entity.
      (5) A tax credit due and payable under this Part, which is paid after the (5) date specified in Article 96(3), shall not carry any additional charge or compensation.
      Inserted (as from 18th June 2014)

    • Article 97 - Requirement for QFC Entity to be a Going Concern

      (1) A QFC Entity may only make a claim under Article 96 at a time when it is a going concern.
      (2) If a QFC Entity ceases to be a going concern after making a claim under Article 96, but before payment of the tax credit by the Tax Department, it is treated as if it had not made the claim.
      (3) For the purposes of Article 97(1) and Article 97(2), and subject to Article 97(4), a QFC Entity is a going concern if—
      (a) its latest accounts prepared in accordance with GAAP and the laws of the QFC were prepared on a going concern basis;
      (b) nothing in those accounts indicates that they were only prepared on a going concern basis because of an expectation that the QFC Entity would receive a tax credit in respect of Reimbursable Tax Losses under this Part; and
      (c) it is actively seeking business.
      (4) A QFC Entity is not a going concern at any time if it is in administration or liquidation.
      (5) For the purposes of this Article, a QFC Entity is in administration if—
      (a) it is in administration under the Insolvency Regulations 2005, or
      (b) a corresponding situation under the law of a country or territory outside the State exists in relation to the QFC Entity.
      (6) For the purposes of this Article a QFC Entity is in liquidation if—
      (a) it is in liquidation within the meaning of the Insolvency Regulations 2005, or
      (b) a corresponding situation under the law of a country or territory outside the State exists in relation to the QFC Entity.
      (7) For the purposes of Article 97(3), accounts prepared in accordance with GAAP has the same meaning given by Article 15(2).
      Inserted (as from 18th June 2014)

    • Article 98 - Restriction on Carry Forward of Tax Losses and Group Relief where a Tax

      (1) This Article applies if a QFC Entity claims a tax credit under this Part.
      (2) For the purposes of Article 32, a QFC Entity's tax loss for an Accounting Period, which may be set off against any Chargeable Profits of a second QFC Entity by way of Group Relief, is to be treated as reduced by the amount of the Reimbursable Tax Loss for that Accounting Period in respect of which the QFC Entity has received payment of a tax credit under this Part.
      (3) For the purposes of Article 28, a QFC Entity's tax loss for an Accounting Period, which shall be set off against any Chargeable Profits generated by that QFC Entity in succeeding Accounting Periods, is to be treated as reduced by the amount of the Reimbursable Tax Loss for that Accounting Period in respect of which the QFC Entity has received payment of a tax credit under this Part.
      Inserted (as from 18th June 2014)

    • Article 99 - Artificial Arrangements

      (1) To the extent that the Tax Department consider that a transaction is attributable to arrangements entered into wholly or mainly for a disqualifying purpose, it is to be disregarded for the purpose of determining a Reimbursable Tax Loss to which a QFC Entity is entitled to make a claim for payment of a tax credit under this Part.
      (2) Arrangements are entered into wholly or mainly for a “disqualifying purpose” if their main object, or one of their main objects, is to enable a QFC Entity to obtain:
      (a) a tax credit under this Part to which it would not otherwise be entitled; or
      (b) a tax credit under this Part to a greater amount than that to which it would otherwise be entitled.
      (3) In this Article “arrangements” include any action, activity, scheme, agreement or understanding.
      Inserted (as from 18th June 2014)

    • Article 100 – Restriction to Elect for Special Exempt Status or for the Concessionary

      (1) If a QFC Entity has received payment of a tax credit in respect of a Reimbursable Tax Loss under this Part, in the three subsequent Accounting Periods following the Reimbursable Accounting Period in respect of which the Reimbursable Tax Loss was claimed it shall not be entitled to:
      (a) elect for special exempt status; or
      (b) elect for its Chargeable Profits to be charged to tax at the Concessionary Rate.
      Inserted (as from 18th June 2014)