On Action 1 (digital economy), the government advocates consistent tax treatment between primarily digital companies and companies incorporating digital technologies into their businesses. The government supports work to update the threshold for taxation in a territory (permanent establishments) and transfer pricing guidelines, but will propose supplementary rules specific to the digital economy (for example, on the taxation of online advertising) if it thinks this necessary. (The OECD is due to publish a discussion draft on 24 March 2014, see OECD, BEPS/G20 Project: Calendar for planned stakeholders' input 2013-2014.)

On Action 5 (harmful tax practices), the government supports clarification of when a regime is considered to have substance as this will give certainty to legitimate regimes, such as the UK patent box rules (see Practice note, Patent box). However, the government stresses that businesses should continue to be able to operate in a legitimate way for commercial reasons, such as deciding where to carry out research and development, and notes that too heavy a focus on substance may lead the movement of jobs to tax havens. Finally, the government supports scrutiny of transparency around informal rulings that give rise to preferential tax regimes.

On Action 7 (permanent establishments), the government reiterates the need to update the rules to take into consideration modern business forms, particularly digital enterprises and the increasing importance of warehousing, and suggests introducing specific rules if necessary. The government also urges consideration of the particular needs of small businesses.

It intends to make changes to the tax reliefs for television programmes and video games introduced by the Finance Act 2013 (although the latter remains subject to state aid approval). For details of the reliefs, see Practice note, Intangible property: tax: Film tax relief and other corporation tax reliefs for the creative sector. The legislation will be amended to clarify that only those television programmes and video games on which the respective reliefs are claimed are to be treated as separate trades, for the purposes of calculating the profit or loss to which the relief applies. The relief for video games will be extended to goods and services provided from within the European Economic Area and a cap of £1 million per video game will be imposed on sub-contracting, to comply with the state aid rules. The changes to television tax relief will take effect from Royal Assent to the Finance Bill 2014 and the changes to video games tax relief will take effect once state aid approval has been received.

It will introduce a new tax relief for theatre productions, with effect from 1 September 2014. Touring theatre productions will qualify for relief from corporation tax at 25% and other qualifying productions will attract corporation tax relief at 20%. The government will consult on the design of the relief shortly after Budget 2014.

The changes to film tax relief announced in December 2013 will go ahead as planned as EU state aid approval has now been granted (see Legal update, Visual effects tax relief: summary of responses and revised film cultural test).