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Budget 2015: 'Google Tax' introduction confirmed | Budget 2015: 'Google Tax' introduction confirmed |
(about 3 hours later) | |
Companies that move their profits overseas to avoid tax will be subject to a "diverted profits tax" from April, the chancellor has said. | Companies that move their profits overseas to avoid tax will be subject to a "diverted profits tax" from April, the chancellor has said. |
In his final Budget before the election, George Osborne said firms that aid tax evasion will also face new penalties and criminal prosecutions. | In his final Budget before the election, George Osborne said firms that aid tax evasion will also face new penalties and criminal prosecutions. |
The so-called "Google Tax" is designed to discourage large companies diverting profits out of the the UK to avoid tax. | The so-called "Google Tax" is designed to discourage large companies diverting profits out of the the UK to avoid tax. |
It follows rows over how much corporation tax some companies pay. | It follows rows over how much corporation tax some companies pay. |
"Let the message go out: this country's tolerance for those who will not pay their fair share of taxes has come to an end," Mr Osborne said. | "Let the message go out: this country's tolerance for those who will not pay their fair share of taxes has come to an end," Mr Osborne said. |
The Chancellor said his deputy, chief secretary to the Treasury Danny Alexander, would be announcing new legislation on Thursday outlining new criminal offences and penalties for aiding tax evasion. | The Chancellor said his deputy, chief secretary to the Treasury Danny Alexander, would be announcing new legislation on Thursday outlining new criminal offences and penalties for aiding tax evasion. |
It comes after last month's revelation that HSBC colluded with clients of its private bank to evade tax over many years. | It comes after last month's revelation that HSBC colluded with clients of its private bank to evade tax over many years. |
Mr Osborne said he would also change the corporation tax rules to prevent contrived loss arrangements. | Mr Osborne said he would also change the corporation tax rules to prevent contrived loss arrangements. |
He added he would also be closing tax loopholes that enabled businesses to take account of foreign branches when reclaiming VAT on their overheads. | He added he would also be closing tax loopholes that enabled businesses to take account of foreign branches when reclaiming VAT on their overheads. |
Mr Osborne said the new tax measures he was introducing were expected to raise £3.1bn over the next five years. | Mr Osborne said the new tax measures he was introducing were expected to raise £3.1bn over the next five years. |
He added he was also raising the bank levy to 0.21%, which he said would raise £900m. | He added he was also raising the bank levy to 0.21%, which he said would raise £900m. |
And he said he was closing a loophole in the law that allowed the banks to offset charges for mis-selling, including payment protection insurance, and other misconduct against their corporation tax bills. | And he said he was closing a loophole in the law that allowed the banks to offset charges for mis-selling, including payment protection insurance, and other misconduct against their corporation tax bills. |
Double Irish | Double Irish |
Many multinational companies make millions in the UK, but have their headquarters in Ireland where the corporation tax rate is much lower, meaning they pay a lower rate of tax on those profits there. | Many multinational companies make millions in the UK, but have their headquarters in Ireland where the corporation tax rate is much lower, meaning they pay a lower rate of tax on those profits there. |
Companies such as Starbucks, Apple and Amazon, among others, have come in for significant criticism in recent years over the amount of corporation tax they pay in the UK. | |
They are all currently being investigated by the European Commission over their tax arrangements. | They are all currently being investigated by the European Commission over their tax arrangements. |
In 2013, it was revealed that Starbucks paid nothing in corporation tax between 2009 and 2012, despite sales of £400m in 2011, and had only paid £8.56m in corporation tax since it began trading in the UK in 1998. | In 2013, it was revealed that Starbucks paid nothing in corporation tax between 2009 and 2012, despite sales of £400m in 2011, and had only paid £8.56m in corporation tax since it began trading in the UK in 1998. |
Starbucks maintained it had made a loss in those years when it paid no corporation tax. | Starbucks maintained it had made a loss in those years when it paid no corporation tax. |
In 2012 it emerged that internet giant Google avoided tax on £10bn UK revenue in 2011 by doubling the amount of money put into a shell company in Bermuda. Doing so helped it avoid £1bn in corporation tax. | In 2012 it emerged that internet giant Google avoided tax on £10bn UK revenue in 2011 by doubling the amount of money put into a shell company in Bermuda. Doing so helped it avoid £1bn in corporation tax. |
New regime | New regime |
Under the new tax regime, companies with an annual turnover of £10m will have to tell HM Revenue & Customs (HMRC) if they think their company structure could make them liable for diverted profit tax. | Under the new tax regime, companies with an annual turnover of £10m will have to tell HM Revenue & Customs (HMRC) if they think their company structure could make them liable for diverted profit tax. |
Once HMRC has assessed the structures, and decided how much profit has been artificially diverted from the UK, multinationals will have only 30 days to object to the 25% tax. | Once HMRC has assessed the structures, and decided how much profit has been artificially diverted from the UK, multinationals will have only 30 days to object to the 25% tax. |
The European Commission has also been investigating the corporation tax arrangements of several European Union (EU) member states to determine whether those tax arrangements amounted to state aid. | The European Commission has also been investigating the corporation tax arrangements of several European Union (EU) member states to determine whether those tax arrangements amounted to state aid. |