Parliament have published a research briefing on corporate tax (CT) reform. The briefing covers the approach to reform both during the Coalition Government and the current Conservative Government, and focuses on the reduction in the main CT rate, the unification of the main rate and the small companies rate, and reforms to capital allowances. It also covers the UK’s response to the OECD’s base erosion and profit shifting (BEPS) action plan, as well as domestic initiatives to tackle tax evasion and aggressive tax avoidance.
Highlights from the report include:
- Research into the setting of corporate tax rates, including their effect on inward investment, tax revenues and wages.
- The increase in the ability of companies to ‘profit shift’ – or manipulate their real or reported activities so they can declare a greater share of their worldwide profits in low-tax jurisdictions – and what governments and organisations such as the OECD are doing to stop them.
- A discussion of high profile tax cases, the issues at stake, and HMRC’s approach to agreeing settlements.
- The Government’s domestic initiatives to tackle tax evasion and aggressive tax avoidance in this time, including the reform to the controlled foreign companies (CFCs) regime, the introduction of the diverted profits tax (DPT), and Public Accounts Committee (PAC) hearings attended by high profile taxpayers and representatives from HMRC.
- Recent developments in UK corporate taxation, such as the Budget 2016 announcements on limiting the deductibility of corporate interest, hybrid mismatches, and restrictions on the use of CT losses.
- The Office of Tax Simplification’s (OTS) review on simplifying the calculation of corporate tax.
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