HMRC reform of transfer pricing, permanent establishment and diverted profits tax – Law Society response

HM Revenue and Customs (HMRC) is seeking reviews on potential reforms to legislation on transfer pricing, permanent establishments and diverted profits tax. Find out what this means for solicitors.

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.

Read the consultation on the GOV.UK website

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