UK, Australia To Push Diverted Profits Taxes
UK Chancellor George Osborne and Australian Treasurer Joe Hockey have committed to establishing a working group to urgently consider and develop initiatives centered around the UK’s Diverted Profits Tax.
The announcement was made at the Group of Twenty (G-20) Finance Ministers and Central Bank Governors Meeting, which was held in the US on April 16-17, 2015.
One of the issues highlighted at the G-20 meeting was that, through contrived arrangements, some MNCs are diverting profits to avoid tax in their relevant/host jurisdictions.
The two ministers agreed that, subject to the UK Government’s reelection, they will establish a working group comprising senior officials to develop measures to address the issue.
The working group, which will be open to all G-20 members, will build on the UK’s experience in operating its Diverted Profits Tax, which came into effect at the beginning of April 2015. Previously, Australia has expressed interest in introducing a similar arrangement.
The ministers said that any working group initiatives will be consistent with the Organisation for Economic Co-operation and Development’s ongoing work on base erosion and profit shifting, and other international initiatives.
Earlier in March 2015, the UK announced that it is sharing information with five foreign tax administrations, including Australia, to identify and tackle the international tax issues caused by the digital economy. The information is being shared under the “E6” initiative, which was launched in August 2013 by a group of six nations to collaborate and exchange information on complex tax avoidance schemes and structures.
