Mutual Agreement Procedure (MAP) decisions relating to the Diverted Profits Tax
Published 27 October 2021
© Crown copyright 2021
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/mutual-agreement-procedure-map-decisions-relating-to-the-diverted-profits-tax/mutual-agreement-procedure-map-decisions-relating-to-the-diverted-profits-tax
Who is likely to be affected
A limited number of large multinational enterprises with business activities in the UK who have been subject to Diverted Profits Tax but have sought relief under the Mutual Agreement Procedure (MAP) of the relevant tax treaty from what they consider to be taxation not in accordance with the treaty.
General description of the measure
This measure allows relief against Diverted Profits Tax to be given where that is necessary to give effect to a decision reached in MAP.
Policy objective
To ensure that the UK meets its commitments under tax treaties.
Background to the measure
The measure was announced at Autumn Budget 2021 to ensure the proper implementation of our treaties.
Detailed proposal
Operative date
The measure will have effect for any MAP decisions involving Diverted Profits Tax which are reached after 27 October 2021.
Current law
The legislation governing which taxes can be subject to the UK’s tax treaty network is at Part 2 of the Taxation (International and Other Provisions) Act 2010 (TIOPA 2010).
Companies engaging in the diversion of profits from the UK which meet the conditions for the Diverted Profits Tax to apply are subject to the legislation at:
- Part 3 of the Finance Act 2015
- Schedule 6 to the Finance Act 2019
Proposed revisions
Legislation will be introduced in Finance Bill 2021-22 to amend Part 2 of the TIOPA 2010 in order to make Diverted Profits Tax one of the taxes in respect of which, subject to the terms of the relevant treaty, a MAP outcome can potentially be implemented.
Summary of impacts
Exchequer impact (£m)
| 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 |
|---|---|---|---|---|---|
| Nil | Nil | Nil | Nil | Nil | Nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant economic impacts.
The terms used in this section are defined in line with the Office for Budget Responsibility’s indirect effects process. This will apply where, for example, a measure affects inflation or growth. You can request further details regarding this measure at the email address listed below.
Impact on individuals, households and families
This measure is not expected to have any impact on individuals. There is expected to be no impact on family formation, stability or breakdown.
Equalities impacts
This measure will only impact larger multinational enterprises, and therefore it is not anticipated that there will be impacts on groups sharing protected characteristics.
Impact on business including civil society organisations
This measure is not expected to have any impact on businesses who will see no change to what they currently do. There are not expected to be any costs to business. There is expected to be no impact on civil society organisations.
Operational impact (£m) (HMRC or other)
The measure carries no operational impacts to HMRC.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be kept under review through pre-existing processes for the monitoring of Diverted Profits Tax and MAP requests.
Further advice
If you have any questions about this change, please contact Helen Steer (Transfer Pricing Policy Team) on helen.steer@hmrc.gov.uk