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<p>The UK has a comprehensive range of measures in place to tackle tax avoidance and
tax planning arrangements entered into by multinational corporations.</p><p> </p><p>For
example, the Diverted Profits Tax (DPT) was introduced in 2015, and aims to change
the behaviour of companies using contrived arrangements to avoid UK tax, by charging
tax on these arrangements at a higher rate. Its primary purpose is to ensure that
the profits taxed in the UK fully reflect the economic activity carried on in the
UK.</p><p> </p><p>Similarly, the Offshore Receipts from Intangibles Property (ORIP)
regime, introduced in 2019, is designed to deal with arrangements where the UK sales
of multinational groups generate significant offshore income in low or no tax jurisdictions,
in circumstances where normal royalty withholding tax rules would not apply. This
measure is expected to generate about £1bn of additional tax revenue over a five year
period.</p><p> </p><p>The UK continues to take a leading role in international efforts
to tackle tax avoidance by multinationals. Following on from the OECD BEPS (Base Erosion
and Profit Shifting) project, the UK is fully engaged in continuing work at the OECD
in relation to the challenges of taxing the digital economy. The UK has been at the
forefront of these discussions within the OECD, and will be continuing to meet virtually
with the OECD Working Parties in the coming weeks and months.</p><p> </p><p>With regard
to the taxation of the digital economy, the UK has been clear that it favours an international
agreement on this issue. In advance of an agreed outcome, the UK has introduced its
own Digital Services Tax (DST) which came into force in April 2020 and is expected
to generate over £2bn of additional tax revenue in the next 5 years.</p><p> </p><p>The
DST will be an important tool for addressing the limitations of the existing international
tax framework, ensuring that businesses pay tax in the UK that reflects the value
they generate from user interaction. The Government has been clear that it will remove
the DST once an appropriate global solution is in place.</p>
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