Country-by-country reporting “daft”, House of Lords told

Country-by-country reporting “daft”, House of Lords told

Country-by-country reporting risks the UK's tax sovereignty, the House of Lords Economic Affairs Committee hears

THE INTRODUCTION of a formulary apportionment tax system is a “completely daft idea”, the House of Lords Economic Affairs Committee has heard.

Also known as country-by-country reporting, the system sees profits made by multinational corporations declared in each jurisdiction they operate in and taxed accordingly, with the aim of preventing profit shifting and tax base erosion.

However, such a system would see the UK relinquish tax sovereignty to the EU or another international body – a situation Deloitte’s head of tax policy Bill Dodwell told the committee would be “completely daft”.

The US operates a similar system between its states, which sees employment driven from one state to another for tax efficiency purposes, the lords heard. Indeed, with as many as 20 different tax methodologies in place, the US does not promote the system to the OECD, the panel comprising Dodwell, Ernst & Young’s Chris Sanger, PwC’s Richard Collier and Mercer & Hole’s Adam Broke said.

That evidence, though, was disputed by pepresentatives of non-government organisations also in attendance.

“One of the things in the full version of country-by-country reporting would be to pull out the nature of intra-group transactions and disclose those separately by country so we could see just what multinationals are doing to shift profits,” Tax Research UK founder Richard Murphy said.

 

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource