THE DIVERTED PROFITS TAX is consistent with the OECD’s Base Erosion and Profit Shifting (BEPS) project, Treasury minister David Gauke has told Accountancy Age.
In April, the OECD’s director leading BEPS Pascal Saint-Amans said the body had an “embarrassed view” of the diverted profits tax, which will be applied to multinational businesses that shift profits made in the UK offshore.
Responding to fears that countries taking unilateral action on tax policy could undermine the OECD’s attempts to curtail tax leakage by multinational companies, Gauke said the objectives behind the diverted profits tax “are consistent with the objectives behind BEPS”, which is about more closely aligning economic activity and tax.
“The diverted profits tax is focused very much on those companies who engage in artificial and contrived behaviour, and that’s exactly what BEPS wants to address as well. So I don’t think it undermines BEPS, I think it supports the direction the BEPS project is taking us,” Gauke said.
The minister was speaking as he visited London-based shoe company Vivobarefoot for the launch of a two-year programme to make it easier for businesses to investing in research and development to claim tax relief.
The tax relief, which encourages companies to invest in costly new product development, allows companies reduce the amount of corporation tax they pay on profits by offsetting them against any investment in research and development. Statistics for 2013/14 show more than 15,000 SMEs claimed the relief in 2013, an increase of around 19% from the previous year.
“We announced in the March Budget we were looking to improve take-up. Take up is good, but we want to go further and we want more people to claim. There’s an element in terms of helping people applying for it for the very first time, there’s a clearance process with HMRC which will be available,” Gauke said.
“We’re also doing more to improve awareness and understand, and that means working with other parts of government to understand which kinds of companies are undertaking R&D and perhaps not claiming, so there’s a proactive attempt to reach companies and let them know this is available.”
Introduced in 2013 to encourage R&D investment, the scheme allows UK businesses to pay only 10% corporation tax on profits derived from any UK or certain EU patents
Yet, KPMG’s annual survey shows that the UK is still an attractive place to do business, despite falling in rankings in tax competitiveness and FDI appeal
MTD cost estimates are not based on 'facts', and are 'disbelieved' by most small businesses and sole traders, says Lords committee chairman
MTD represents 'the single most significant change to the UK’s system of taxation in recent times', says Knill James partner Nick Rawson. So, how prepared are SMEs for digital tax reporting?