UK seeks public input on global tax initiative
The UK government has begun public consultation seeking views on how a worldwide 15 per cent minimum corporation tax should be domestically implemented.
The consultation seeks views on the application of the global minimum corporation tax in the UK, as well as a series of wider implementation matters, including who the rules apply to, transition rules and how firms within the scope should report and pay.
With changes aimed to come into effect from 2023, the consultation is scheduled to run for 12 weeks.
HM Treasury said the exercise underlines a further achievement in the UK’s global leadership on tax reform.
More than 130 countries signed up to a new global minimum tax framework in October 2021, after the G7 agreed in principle.
It would seek to ensure large international firms pay at least 15 per cent tax rate on profits in each country in which they operate.
Treasury said it would help to tackle tax avoidance and ensure a more level playing field for UK businesses.
A statement said through acting swiftly to launch consulting on domestic implementation, the UK demonstrates its continued leadership.
Agreed to y over 130 countries in October 2021, the landmark reform comes as part of a two-pillar package first agreed in principle by the G7 last June, during talks chaired by the UK Chancellor of the Exchequer in London.
Chancellor Rishi Sunak said: “Ensuring large multinational groups pay the right tax in the right place has been a long-standing priority for the UK.
“We reached an historic agreement last October following more than a decade of talks and negotiations, and today marks another important milestone on how this will work in practice.
“The Pillar 2 framework will ensure large multinational firms pay tax of at least 15 per cent on profits in each country in which they operate, creating a more level playing field and further cracking down on tax avoidance. It will be operated on a country-by-country basis.”
The OECD published detailed guidance on the Pillar 2 framework in December last year which countries will use to implement the rules in domestic law.
“This includes guidance on how to calculate the effective tax rate (ETR) of a group in a jurisdiction and the steps that should be taken to collect additional tax where the ETR falls below 15 per cent.
Work continues within the OECD on implementation of Pillar 1 of the October 2021 agreement, which reforms taxation rules to ensure a greater share of multinational profit is taxed in the countries in which their customers are located.