INTM489755 - Diverted Profits Tax: application of Diverted Profits Tax: legislation – Finance Act 2015 – core provisions: the effective tax mismatch outcome – 80% payment test

This test ensures that the legislation applies only if the tax reduction resulting from the material provision is substantial. It is met (that is, there is no effective tax mismatch outcome) if the increase in the second party’s liability to relevant taxes is at least 80% of the reduction in the amount of relevant tax payable by the first party.