A suite of proposed reforms to the UK’s diverted profits tax (DPT) is one of three topics covered by HMRC’s recent consultation, Reform of UK law in relation to transfer pricing, permanent establishment and diverted profits tax, which closed for responses on 14 August 2023. The proposed reforms, which include bringing DPT into corporation tax and making other noteworthy changes to the DPT architecture such that treaty relief and the mutual agreement procedure may be available in respect of a DPT charge, would, if implemented, without doubt take some of the venom out of DPT’s ‘sting’. One question the consultation leaves unanswered, however, is: what is the ‘DPT’ that is left behind and what is its place in the fast-approaching Pillar Two world?
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A suite of proposed reforms to the UK’s diverted profits tax (DPT) is one of three topics covered by HMRC’s recent consultation, Reform of UK law in relation to transfer pricing, permanent establishment and diverted profits tax, which closed for responses on 14 August 2023. The proposed reforms, which include bringing DPT into corporation tax and making other noteworthy changes to the DPT architecture such that treaty relief and the mutual agreement procedure may be available in respect of a DPT charge, would, if implemented, without doubt take some of the venom out of DPT’s ‘sting’. One question the consultation leaves unanswered, however, is: what is the ‘DPT’ that is left behind and what is its place in the fast-approaching Pillar Two world?
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