US multinationals have attacked George Osborne’s diverted profits tax, warning that the so-called ‘Google tax’ – which comes into force in April – would have ‘a chilling effect on inward investment’, reports the FT. The National Foreign Trade Council (NFTC), a US lobby group representing more than 300 multinationals, said that ‘the new tax seems to go against the [prime minister’s] declaration … that “the UK is open for business”’, while the CBI has called for ‘significant changes’ to be made to the legislation ‘so the regime does not capture genuine commercial arrangements’.
Katja Hall, CBI deputy director-general, said: ‘The broad scope of the rules is resulting in real concern that HMRC will not be able to cope with the quantity of notifications from companies, causing long periods of business uncertainty. To alleviate the burden we recommend that a “gateway test” is added into the legislation to allow companies to self-assess at the outset whether they fall within the scope of the tax. This will ensure the legislation is targeted solely on abusive arrangements and minimise HMRC resources.
‘As this measure precedes OECD BEPS initiative findings, not only it is likely to put UK firms at a competitive disadvantage and put off would-be investors, but it may encourage other countries to take similar unilateral action resulting in a patchwork of complex uncoordinated legislation.’
The Institute of Directors has also raised concerns, urging the government and opposition to either postpone the enactment of the tax until the Finance Bill after the general election or, preferably, until the outcomes from the OECD’s BEPS project.
US multinationals have attacked George Osborne’s diverted profits tax, warning that the so-called ‘Google tax’ – which comes into force in April – would have ‘a chilling effect on inward investment’, reports the FT. The National Foreign Trade Council (NFTC), a US lobby group representing more than 300 multinationals, said that ‘the new tax seems to go against the [prime minister’s] declaration … that “the UK is open for business”’, while the CBI has called for ‘significant changes’ to be made to the legislation ‘so the regime does not capture genuine commercial arrangements’.
Katja Hall, CBI deputy director-general, said: ‘The broad scope of the rules is resulting in real concern that HMRC will not be able to cope with the quantity of notifications from companies, causing long periods of business uncertainty. To alleviate the burden we recommend that a “gateway test” is added into the legislation to allow companies to self-assess at the outset whether they fall within the scope of the tax. This will ensure the legislation is targeted solely on abusive arrangements and minimise HMRC resources.
‘As this measure precedes OECD BEPS initiative findings, not only it is likely to put UK firms at a competitive disadvantage and put off would-be investors, but it may encourage other countries to take similar unilateral action resulting in a patchwork of complex uncoordinated legislation.’
The Institute of Directors has also raised concerns, urging the government and opposition to either postpone the enactment of the tax until the Finance Bill after the general election or, preferably, until the outcomes from the OECD’s BEPS project.
