The FT reported (17 June) that a number of major US companies have warned investors of the potential financial impact of UK’s new diverted profits tax (DPT) which came into force in April. Because of the quarterly reporting rules for US-listed companies they have been required to analyse the new tax quicker than might have been anticipated.
The DPT, which levies a 25% charge on diverted profits of companies that avoid a taxable presence in the UK or use overseas affiliates that ‘lack economic substance’, was set up to tackle tax avoidance in UK and has been criticised by US businesses and politicians who say that the UK is undermining attempts to reach a global consensus on tax avoidance by moving ahead of the BEPS project. Treasury minister David Gauke last month said: ‘We introduced the DPT to protect ourselves against highly contrived arrangements to avoid UK tax.’ The tax is expected to raise £1.4bn in the next five years.
Eleven companies express concern in their reports to investors according to the FT, including Michael Kors, QLogic Corporation and Steiner Leisure. Michael Kors, which last year moved its tax residency from the British Virgin Islands to UK, said: ‘While the company believes that all of its affiliated entities and the transactions among them have the required economic substance, there is no assurance that this legislation will not have a material effect on its results of operations and financial condition.’
The FT reported (17 June) that a number of major US companies have warned investors of the potential financial impact of UK’s new diverted profits tax (DPT) which came into force in April. Because of the quarterly reporting rules for US-listed companies they have been required to analyse the new tax quicker than might have been anticipated.
The DPT, which levies a 25% charge on diverted profits of companies that avoid a taxable presence in the UK or use overseas affiliates that ‘lack economic substance’, was set up to tackle tax avoidance in UK and has been criticised by US businesses and politicians who say that the UK is undermining attempts to reach a global consensus on tax avoidance by moving ahead of the BEPS project. Treasury minister David Gauke last month said: ‘We introduced the DPT to protect ourselves against highly contrived arrangements to avoid UK tax.’ The tax is expected to raise £1.4bn in the next five years.
Eleven companies express concern in their reports to investors according to the FT, including Michael Kors, QLogic Corporation and Steiner Leisure. Michael Kors, which last year moved its tax residency from the British Virgin Islands to UK, said: ‘While the company believes that all of its affiliated entities and the transactions among them have the required economic substance, there is no assurance that this legislation will not have a material effect on its results of operations and financial condition.’
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