Diverted Profits Tax - navigating your way

Diverted Profits Tax - navigating your way

A high level brochure setting out an overview of the DPT rules, when they may apply and frequently asked questions.




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Diverted Profits Tax - navigating your way

DPT applies differently to non-UK companies in comparison to UK companies.

For a non-UK tax resident company, DPT broadly applies where arrangements have been put in place to avoid a UK taxable presence being created. For a UK tax resident company, DPT generally applies where profits are regarded as diverted to foreign companies that are not subject to an effective tax rate of at least 80% of the UK tax rate.

Key highlights:

  • Diverted Profits Tax is a tax aimed at companies that enter into arrangements that divert profits from the UK, which was introduced in the 2014 Autumn Statement
  • The rate of tax charged on DPT is 25%
  • Profits are considered: diverted by the avoidance of a UK taxable presence of a foreign company; moving profits out of the UK through deductible expenses; or forgoing the opportunity to earn profits
  • The rules generally do not apply to small and medium sized enterprises
  • It is the company’s responsibility to notify HM Revenue & Customs they are potentially in the scope of the rules

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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