The UK’s HM Revenue and Customs on March 26 confirmed that it has joined with tax authorities of five other nations to share information about how digital multinationals might be shifting profits to tax havens.
HMRC said that information gleaned from the collaboration will assist in applying the new UK diverted profits tax, slated to go into effect April 1. The 25 percent tax targets large MNEs that exploit permanent establishment rules or that reduce their tax liability through transactions or entities that lack economic substance.
“Multinational digital businesses should pay the tax that is due, just like everybody else. By sharing information internationally we are making sure this happens,” said David Gauke, Financial Secretary to the Treasury.
The alliance was first announced by Australian Tax Office Deputy Commissioner Mark Konza in May 2014. In addition to the UK and Australia, the effort is reported to involve China, Japan, and the US. The identity of the sixth nation is unknown.
Konza said information from the collaboration has been used in audits and to inform the OECD’s digital task force and the hybrids focus group about tax structures for work on the base erosion profit shifting project.
HMRC also confirmed that it is participating in the Joint International Tax Shelter Information Collaboration (JITSIC), a collaboration involving more than 20 tax administrations that exchange information on complex tax avoidance schemes and structures involving multinational enterprises and high net worth individuals.
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