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Eversheds comment: Multinationals will seek clarity on artificial diversion element of diverted profit tax plan

  • United Kingdom

    03-12-2014

    Commenting on the diverted profit tax announced in today's Autumn Statement, Ben Jones, partner at law firm Eversheds, says:

    “One of the big surprises of the Autumn Statement was the Government breaking ranks with the ongoing international movement to ensure fair taxation of multinational business (the BEPS project) through the announcement of the Diverted Profit Tax. This new tax is designed to target profits that are artificially diverted from UK and tax such profits at a 25% rate, higher than the current UK corporate tax rate of 21%.

    "This tax is clearly meant as a deterrent rather than a direct revenue raiser, to encourage businesses not to divert tax from the UK and so pay UK tax at normal UK tax rates. Multinational businesses will be waiting with interest to see the detail of this new tax and particularly what is meant by artificial diversion. Such businesses will be looking for a clear, precise definition but may be disappointed – as a deterrent the tax will be much more effective if defined widely and generally." 

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