Multinational corporations (MNCs) based in Britain will have to provide HM Revenue and Customs (HMRC) with a breakdown of all the countries in which they make profits and pay taxes around the world, said the UK Treasury.
The announcement means that the UK is the first of the 44 member countries of the Organisation for Economic Cooperation and Development (OECD) to formally commit to implementing its new country-by-country reporting framework.
The framework was among the proposals on base erosion and profit shifting (BEPS) issued last week by the OECD, which aims to create a single set of international tax rules that prevent MNCs from artificially shifting profits to low-tax jurisdictions.
“The UK has been at the forefront of tackling international tax avoidance,” said David Gauke, financial secretary to the UK Treasury. “We believe that country-by-country reporting will improve transparency and help identify risks for tax avoidance – that’s why we’re formally committing to it.
“Reporting high level information using a standardised format across all jurisdictions will ensure consistency, give tax authorities the information they need and minimise the additional administration burden on business.”
Last month the UK government said that European Union (EU)-wide country-by-country reporting requirements for oil, gas and mining companies would be introduced for UK-registered companies on 1 January 2015, six months before the EU’s accounting and transparency directives formally come into force.
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