The government has published draft tax legislation to implement the new tax on diverted profits which has been referred to as the 'Google tax'. The introduction of a new Diverted Profits Tax which was announced in the 2014 Autumn Statement will target multinational enterprises with business activities in the UK who 'enter into contrived arrangements to divert profits from the UK by avoiding a UK taxable presence and/or by other contrived arrangements between connected entities'.

The Diverted Profits Tax will be applied using a rate of 25% from 1 April 2015 and is expected to raise £1.4bn over the course of the next five years.
[url=http://www.boxwell.co.uk/news/tax-diverted-profits-dubbed-new-google-tax?goal=0_cf476628b8-79a28c0204-412294561linky[/url

The CBI says it's "unfortunate" that the govt. has decide to 'go it alone', so that's all good.

Is that all its going to raise - 280m a year - there will be individuals who saved that let alone multi national corporations - some of the Russians in London come to mind

It's not what it's expected to raise that's the point, if tax is paid on all 'diverted profits' then that's all good.

Unless you suggest the tax should be at 200% or something to make it worthwhile?

Something is being lost in translation here - the numbers people on here are talking about are for this tax dodge are "allegedly" huge, whilst £1.4bn is a big number it isn't huge in terms of the tax avoidance taking place in this area. It nnis estimated this tax dodge is worth £12-15bn a year so to recover £1.5bn of £60bn seem paltry?

My point is I'm not interested in estimates of what something may or may nor produce. If the principle is established that the buggers have to pay a fair rate on all UK profits regardless of where they may divert them to then it is up to HMRC to collect. I think they could do that now, but there ya go. I'd agree it should on the face of it raise a damn sight more but the basic principle is simple - do they pay UK tax at 0% on this money or at a fair % on all this money. End of.

How do you measure what's "Diverted profit" and how measure what's a valid "exported cost" ?

As you say its a step in the right direction - it is crazy that the likes of Apple pay virtually no CT in this country despite huge profits.

We need to be mindful that this situation will be happing in reverse to some of our global companies. BP will generate huge profits in higher taxation countries but pay into our coffers. Do our companies make more profits abroad than overseas companies make in the UK?

I doubt that its a balanced equation though, for this to be fair we'd have to assume that BP diverted all of its overseas revenue to the UK and paid tax here - I bet they don't though.

BP is but one company even if it did pay tax elsewhere it still paid about 3bn in UK CT - you think of all the British companies that trade abroad and the tax revenues HMRC get on those revenues. The company I work for trades in US, Romania, UAE, Singapore, India, China, Malysia and Australia as well as the UK - all the profits are taxed in the UK. We moan here about the likes of Apple and Google etc but we are not so squeaky clean ourselves.

The question is if profits were all taxed in the country in which they were generated would HMRC be better or worse off?

Its not quite the same thing but you may be interested in a new regulation that sneaked in on Jan 1st that was brought to my attention by 38 degrees or some other pressure group because it might even affect me - the Useless Vince has been petitioned about it anyway.

From Jan 1st it became a requirement for anyone who traded in web sales of media to levy VAT on those sales - this will mainly affect independent bands who sell their own audio tracks and the worst thing about it is there is no opt-out below a threshold of turnover as there normally is with VAT, even worse is that you have to levy VAT at the rate applicable to the country that the user was located in when they downloaded it (its a European ruling).

There is a threat that this will include all web sales of any type from next year, hence my own interest.

Its all gone quiet since I first read of it so not sure if its actually being implemented now but it sort of addresses the issue of taxation being diverted to the country in which the revenue was derived albeit a ridiculous sledgehammer for sole traders turning over less than the current UK VAT threshold - the petition to old Vince was to introduce the threshold to this sort of legislation but its not his governments law to tinker with.

I'll throw another "what if" into the equation now.

Many trans-national companies are diverting tax away from emerging and 3rd world economies. Many of these countries are receiving support by way of UK Aid, how much could our overseas aid budget be equitably reduced if these economies received their fare share of the tax-take?

I agree with the principle but I think even if this was all sorted out we would still find a way of donating huge amounts of foreign aid. This is one of the ways the likes of Blair get influence and help them get high powered job after they finish in parliament. When Clegg loses his seat what will he do? We currently give aid to India, a country with a GDP almost the size of ours so I would suggest foreign aid has nothing to do with loss of tax revenues through diverted profits