Question proposed, That the clause stand part of the Bill.

The clause repeals the offshore receipts in respect of intangible property legislation, known as ORIP, which was aimed at disincentivising large multinational enterprises from holding intangible property in a low-tax jurisdiction if the intangible property was used to generate income in the UK. Such enterprises could thereby gain an unfair competitive advantage over those that held intangible property in the UK. The policy is no longer required, because pillar two—the global minimum tax—will more comprehensively discourage the multinational tax planning arrangements that ORIP sought to counter.

As set out in the corporate tax road map, which we debated earlier, the Government are committed to simplification of the UK’s rules for taxing cross-border activities in the light of pillar two. Repeal will take place alongside the introduction of pillar two’s undertaxed profit rules in the UK from 31 December 2024, which we debated with clause 19. Clause 20 simply repeals chapter 2A of part 5 of the Income Tax (Trading and Other Income) Act 2005, and I commend it to the Committee.

As we heard from the Minister, clause 20 repeals the ORIP rules, which are about ensuring that profits derived from UK consumers are taxed fairly and consistently, regardless of where the underlying intangible property is held. The previous Government announced in the 2023 autumn statement that they would abolish ORIP, so we support the clause.

The ORIP rules were a short-term, unilateral measure introduced in the Finance Act 2019 to disincentivise large multinational enterprises from holding intangible property—assets such as patents, trademarks and copyrights—in low-tax jurisdictions if it was used to generate income in the UK. Such multinationals could thereby gain an unfair competitive advantage over others that hold intangible property in the UK, as well as eroding the UK tax base. However, the legislation is no longer required, because the OECD/G20 inclusive framework pillar two global minimum tax rules will comprehensively discourage the multinational tax planning arrangements that ORIP sought to counter.

As the Minister said, the repeal will happen alongside the introduction of the pillar two undertaxed profits rule from 31 December 2024. Has he assessed how successful the ORIP rules have been since their introduction? HMRC’s tax information and impact notes state that this measure will have a negligible impact on around 30 large multinational groups and a negative impact on the Exchequer, peaking at £40 million in 2026-27. Can the Minister clarify why the repeal of the ORIP rules is having a negative impact on revenues to the Exchequer? I note that the Chartered Institute of Taxation has welcomed the measure and specifically said that

“any reduction in the legislative code to minimise overlap and unnecessary measures is welcome.”

We say amen to that.

As I have set out, we will not oppose the clause, but I look forward to the Minister’s response to my specific points about ORIP.

I thank the shadow Minister for his support for the clause. I think his question was about the impact of repealing ORIP. A fundamental point here is that pillar two, which we debated previously, will now tax the profits that were the target of ORIP. Pillar two is expected to raise more than £15 billion over the next six years, so ORIP is simply no longer needed. The Government believe that simplifying and rationalising the UK’s rules for taxing cross-border activities is important, and as such it is right that we use this opportunity to repeal ORIP.

Question put and agreed to.

Clause 20 accordingly ordered to stand part of the Bill.