Small and medium sized enterprises are now generally exempted from the UK’s transfer pricing rules as set out at Section 166 TIOPA. In order to protect the UK tax base and given a significant number of medium sized enterprises in the UK, the government is proposing to remove the medium-sized enterprise exemption (whilst the exemption for small enterprises will be retained). As a result, medium sized enterprises will be within the TP regime in the UK.
The threshold for the new exemption will be for companies with maximum 50 employees, or £10 million of turnover or £10 million of balance sheet total. Important point to note here is these thresholds are based on consolidated group numbers, not just the individual UK entity.
