Budget 2016: First estimate of tax raised from BEPS
17 March 2016
Bill Dodwell, head of tax policy at Deloitte, comments on the Government’s first estimate of tax raised from BEPS:
“The Government is a major supporter of the international corporate tax changes put forward by the G20/OECD’s Base Erosion and Profit Shifting project. Yesterday it estimated that three measures – limiting interest deductions, outlawing the use of hybrid mismatches and a modest new withholding tax on certain royalties – will raise about £1.3 billion annually. More tax will be raised from adopting the changes to intercompany transfer pricing rules and changes to double tax treaties, expected from 2017. The OECD estimated that base erosion costs countries between 4-10% of their corporate tax revenues.
“The Government has also announced that new limits on deductions for financing costs will be introduced from 1 April 2017. Changes to outlaw hybrid mismatches have already been legislated and will commence from 1 January 2017.
“The Government will extend the UK’s withholding tax rights so that payments for the use of intangible assets, such as trademarks and brand names made to overseas persons, will be subject to withholding tax. This will be subject to potential relief under a double taxation agreement or the EU Interest and Royalties Directive.”
Notes to editors
- Double tax treaties are international agreements between two countries which set out which country has taxing rights to sources of income and capital gains. The BEPS project recommends additional clauses to double tax treaties to make it clear that they cannot be used in unintended circumstances.
- Changes to withholding tax will take effect with Royal Assent, expected in July 2016.
- You can find Deloitte’s Budget coverage on our dedicated website www.ukbudget.com. You can also follow us on Twitter: @ukbudget where Bill Dodwell, head of tax policy at Deloitte, gives regular views.
The following experts from Deloitte are available for comment on the Budget. Please call the Deloitte Budget Media Hotline on 020 7007 3333:
Bill Dodwell – Business taxes and general topics
Ian Stewart – Economics
Daniel Lyons – Indirect and environmental taxes
Patricia Mock – Personal taxes, including pensions
Mark Groom - Employment taxes, including pensions
Phil Nicklin – Property taxation
Gerry Biddle – Business rates
Roman Webber – Oil and gas taxes
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
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The information contained in this press release is correct at the time of going to press.
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