Tax rates on the profits of UK PEs of non-resident corporations are the same as for domestic corporations.
There are specific rules setting out how the PE's profits should be evaluated for UK tax purposes, which broadly seek to treat the business as if it were a standalone company. Financing arrangements between the PE and head office must be disregarded, and there are special rules for banks to stop under-performing loans being allocated to the UK PE in a way that is considered unacceptable and similar potential manipulations. However, a deduction is given for a proportion of head office costs.
Tax is not generally withheld on transfers of profits from a UK PE to the head office. However, Finance Act 2016 amends the rules for deduction of UK income tax as tax at source on royalty payments made after 15 September 2016, which could result in tax being withheld on royalty payments made by a foreign company in connection with activities carried on through a UK PE.