HMRC reform of transfer pricing, permanent establishment and diverted profits tax – Law Society response
The proposals
The purpose of the potential reforms is to consider how the UK’s domestic rules can be updated, simplified and clarified to ensure that their application is clear to taxpayers, and aligns with international standards and the UK’s bilateral treaties.
This includes:
- considering transfer pricing rules
- updating the domestic legislation on permanent establishment (PE)
- bringing diverted profits tax more in line with corporation tax
Our view
Broadly, we support reform in this area and agree with simplifying the regime to allow alignment with our international treaties and the OECD’s framework.
Our response focuses mainly on the proposals for transfer pricing and permanent establishment.
We note some of the issues solicitors face while advising clients in this area.
What this means for solicitors
These proposals will change the way solicitors advise their multinational enterprise clients on their tax affairs.
Next steps
This consultation closed on 23 August 2023.
We are awaiting a government response.