PPP projects raise a number of issues associated with taxation of assets, revenues, interest payments and profits. Limited recourse financing creates particular challenges for tax liabilities, e.g. transfer pricing, depreciation, VAT offsetting, and taxation of subsidies. In jurisdictions where limited recourse financing is not common, the application of those tax liabilities may not be fully understood.
| Box 2.1: UK Reforms to Improve Transparency |
| In order to improve transparency the UK Government plans to: • monitor and disclose all commitments arising from off-balance sheet PPP contracts; • require the private sector to provide equity return information for publication; • publish an annual report detailing project and financial information on all projects where Government holds a public sector equity stake; • introduce a business case approval tracker on the Treasury website; and • improve the information provisions within the standard contractual guidance. Source: Infrastructure UK, "A new approach to public private partnerships" (December 2012). |