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UK leads the way in new reporting model

The Treasury has said that the United Kingdom holds the top spot in a list of 44 countries in committing to a new model of tax reporting.

The Organisation for Economic Co-operation and Development (OECD) put the new model in motion to emphasise a pledge to combat large organisations committing tax avoidance. Multinationals based in Britain will now be obligated to inform HMRC of the countries in which they make a profit and pay tax.

The model is intended to assist tax authorities in collecting data on multinational firms’ international activities, taxes and profits. This allows them to better evaluate those areas in which risks are present, and identify where they should be looking in terms of tax avoidance efforts.

Firms including Starbucks, Amazon, and Google have been targeted for using offshore jurisdictions in a bid to decrease their tax liabilities.

The most common method of tax avoidance being employed is transfer pricing. Some have claimed that it mitigates liabilities.

David Gauke, the financial secretary of the Treasury, commented:

“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. 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.”

Tax avoidance is a habit that can ultimately catch up with a business, whether it is a multinational or an SME. It is always wise to consult an accountant, from Liverpool to London, to ensure that everything is in order.

Posted by admin
October 9, 2014

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