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<p>The UK has led international efforts to tackle avoidance by multinationals, including
through the OECD Base Erosion and Profit Shifting (“BEPS”) Project which looks at
aggressive tax planning strategies that exploit tax rules to artificially shift profits
to low tax jurisdictions where there is little or no economic activity.</p><p> </p><p>This
international collaboration has led to the introduction of hybrid mismatch rules that
prevent multinationals exploiting differences in the tax systems of different countries,
a requirement for UK headed large businesses to provide HMRC with a country-by-country
report, detailing their global profits, tax and assets to ensure they are paying the
correct tax on all their UK activity, and a Corporate Interest Restriction that protects
against companies using intra-group loans to shift profits overseas.</p><p> </p><p>Alongside
these multilateral efforts are UK domestic rules that have complemented these changes.</p><p>
</p><p>In April 2015, the UK Government introduced the Diverted Profits Tax (‘DPT’).
DPT was designed to counter contrived arrangements used by multinational corporations
to shift their profits offshore and avoid paying tax in the UK on their economic activities
here.</p><p> </p><p>In January 2019 HMRC launched a new Profit Diversion Compliance
Facility (‘PDCF’) to encourage businesses to stop diverting profits and pay what is
due. About two-thirds of the large businesses targeted so far have decided to use
the facility to bring their tax affairs up to date quickly and efficiently, enabling
HMRC to focus even more resources on investigating businesses which continue to divert
profits.</p><p> </p><p>Multinationals can often have complicated tax affairs and HMRC
are determined to ensure that their profits are correctly attributed, and they are
paying all the tax they owe.</p><p> </p><p>Additional information about HMRC’s work
to tackle profit diversion by multinational companies is available on GOV.UK along
with the most recent Transfer Pricing and Diverted Profits Tax statistics:</p><p>
</p><p><a href="https://www.gov.uk/government/publications/transfer-pricing-and-diverted-profits-tax-statistics-2019-to-2020/tackling-profit-diversion-by-multi-national-companies"
target="_blank">https://www.gov.uk/government/publications/transfer-pricing-and-diverted-profits-tax-statistics-2019-to-2020/tackling-profit-diversion-by-multi-national-companies</a></p><p>
</p><p><a href="https://www.gov.uk/government/publications/transfer-pricing-and-diverted-profits-tax-statistics-2019-to-2020"
target="_blank">https://www.gov.uk/government/publications/transfer-pricing-and-diverted-profits-tax-statistics-2019-to-2020</a></p>
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