The British government has asked multinational companies to report to HMRC where they make profits and pay taxes around the world, as part of a wider movement against tax avoidance.
The UK became the first of 44 countries to formally commit to implementing the new country-by-country reporting template, which was put forward by the OECD last week.
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The framework has been developed to assist tax authorities collect information on multinational companies’ global activities, profits and taxes, allowing them to initiate measures to reduce tax avoidance and to assess risk.
The OECD has released its first series of recommendations under its base erosion and profit shifting (BEPS) in seven detailed reports last week. BEPS aims to design a set of international tax rules to end the erosion of tax bases and the artificial shifting of profits to jurisdictions to avoid paying tax.
David Gauke, financial secretary to the Treasury, said: "We believe that country-by-country reporting will improve transparency and help identify risks for tax avoidance that’s why we’re formally committing to it.
"In time improved transparency between business and tax authorities will also help developing countries in dealing with compliance, as they often lack the capacity to collect this information themselves.
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By GlobalData"Reporting high level information using a standardized format across all jurisdictions will ensure consistency, give tax authorities the information they need and minimize the additional administration burden on business," he added.
