The Chancellor of the Exchequer, the Rt. Hon. George Osborne, MP, and the Treasurer of Australia, the Hon. Joe Hockey, MP, announced during the course of the G20 meeting the urgent establishment of a joint working group to further consider and develop initiatives in relation to diverted profits by multinational enterprises.
The G20 meeting in Washington DC (16-17 April) highlighted the issue that, through contrived arrangements, some multinationals are diverting profits to avoid tax in their relevant jurisdictions.
The Ministers have resolved, subject to the completion of the UK general election, to establish a senior officials working group that will develop measures to address the diversion of profits by multinational enterprises away from their host countries.
Both the UK and Australia have sought to put in place competitive business tax regimes in order to encourage enterprise and investment, but those tax rates should be paid, not avoided through artificial structures.
The working group will build on the UK’s experience of introducing a Diverted Profits Tax, which came into effect at the beginning of April.
This is a global issue that needs to be quickly addressed, and as such the working group will be open to all G20 members.
Any working group initiatives will be consistent with the work of the OECD on Base Erosion and Profit Shifting, and other international initiatives such as the Automatic Exchange of Information and Tax Inspectors Without Borders.