An amendment to Finance Bill 2016 has been agreed by Parliament, giving the Treasury the option to require public country by country (CbC) reporting as part of a group’s published tax strategy. The amendment does not include a fixed timetable for implementation, but increases the pressure for adoption of multilateral public reporting initiatives such as those proposed by the EU.
The amendment is brief and leaves many open questions, particularly around the scope of any implementation. The UK requirement to publish a tax strategy applies to groups that fall within the senior accounting officer (SAO) regime, many of which are not within the current CbC reporting regime. Similarly, it is unclear whether HMRC could compel non-UK headquartered groups to publish their full CbC report if filed with a tax authority elsewhere.
In practice this may just be a declaration of intent to global policymakers. The UK Government has repeatedly expressed support for multilateral public CbC reporting and appeared reluctant to go it alone. Many businesses would be concerned at the prospect of publishing potentially commercially sensitive data – one of the reasons for the EU proposals recommending a reduced level of public disclosure, particularly if their peers headquartered overseas are not required to publish such data. The focus will now be on the EU and other OECD member countries to see if they are willing to follow suit.
The full text of the amendment is as follows:
Schedule 19, page 589, line 29, at end insert—
‘(6) The Treasury may by regulations require the group tax strategy to include a country by country report.
(7) In this paragraph ‘country by country report’ has the meaning given by the Taxes (Base Erosion and Profit Shifting) (Country by Country Reporting) Regulations 2016.’
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