Global corporations based in the UK will now have to report where they make their profits and pay their taxes to HMRC, the UK government has announced.
The new country-by-country reporting template was released this week by the OECD and the UK is the first of 44 countries to officially sign up.
“The UK has been at the forefront of tackling international tax avoidance,” said Financial Secretary to the Treasury David Gauke. “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.”
The template aims to help tax authorities to collect information on the international activities of multinationals, including their profits and taxes, making it easier to hone measures to reduce tax avoidance and to assess risk.
“In time improved transparency between business and tax authorities will also help developing countries in dealing with compliance, as they often lack the capacity to collect this information themselves,” said Gauke. “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.”
The UK took a proactive role in conceptualising the template during the country’s presidency of the G8 last year. It has since called on the OECD to develop and strengthen the template to help strengthen international standards on Base Erosion and Profit Shifting (BEPS).
The reporting template will be presented to G20 Finance Ministers by the OECD this weekend.
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