HM Revenue and Customs (HMRC) has today confirmed it is working with five other tax authorities to share information about how digital multinationals might be shifting their profits to tax havens.
Information from the 'E6' project will feed into how HMRC applies the new Diverted Profits Tax, which is being introduced next month. The tax is set at a rate of 25% to target multinationals that avoid paying tax on profits from UK activity by shifting them to countries where they'll go untaxed.
This work is part of a package of measures aimed at ensuring multinational businesses pay their fair share of tax that are being taken forward by the government.
David Gauke, Financial Secretary to the Treasury, said:
“Multinational digital businesses should pay the tax that is due, just like everybody else. By sharing information internationally we are making sure this happens.
“HMRC's work in this area is already paying dividends, as next month's introduction of the Diverted Profits Tax shows, and the government will continue to work tirelessly to change the global landscape of corporate tax avoidance.”
The E6 project is another example of international collaboration on tax avoidance. HMRC is already part of the Joint International Tax Shelter Information Collaboration (JITSIC) – a group of more than 20 tax administrations that collaborate and exchange information on complex tax avoidance schemes and structures involving multinational enterprises and high net worth individuals.
The UK is also working with the Organisation for Economic Cooperation and Development (OECD) to reach international agreement on how the global corporate tax system can be reformed to remove opportunities for avoidance.