UK-based multinationals will have to report to HMRC where they make profits and pay taxes around the world, as Britain takes the lead to clamp down on international tax avoidance, Financial Secretary to the Treasury David Gauke announced today (Saturday 20 September).
The UK is the first of 44 countries to formally commit to implementing the new country-by-country reporting template, which was this week unveiled by the OECD.
The template is designed to help tax authorities gather information on multinational companies’ global activities, profits and taxes, enabling them to better assess where risks lie and where their efforts to counter tax avoidance should be focused.
The UK initiated the country-by-country reporting template during its G8 Presidency last year, calling on the OECD to develop the template as part of its project to strengthen international standards on Base Erosion and Profit Shifting (BEPS).
The OECD will present the reporting template to G20 Finance Ministers this weekend.
Financial Secretary to the Treasury David Gauke said:
The UK has been at the forefront of tackling international tax avoidance.
We believe that country-by-country reporting will improve transparency and help identify risks for tax avoidance – that’s why we’re formally committing to it.
In time improved transparency between business and tax authorities will also help developing countries in dealing with compliance, as they often lack the capacity to collect this information themselves.
Reporting high level information using a standardised format across all jurisdictions will ensure consistency, give tax authorities the information they need and minimise the additional administration burden on business.