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UK details 'Google Tax' plan

UK details 'Google Tax' plan
11 Dec 2014

First published in The Wall Street Journal, 10 December 2014

The British government detailed plans for a new 25% tax on profits of multinational technology and other companies it says are avoiding paying tax — a move that has prompted complaints from business groups and warnings from tax specialists that it could conflict with international tax treaties.

Jonathan Hornby said that by blazing a trail, Mr. Osborne has raised the risk the new tax could face legal challenge on the basis of existing treaties which aim to ensure companies that operate across borders aren’t taxed twice on the same activity.

“I understand the political backdrop to announcing it now but the smart thing to have done would have been to reach an international consensus.

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Once a tax official decides the diverted profits tax should apply, the company will be issued a notice explaining the charge and how it has been calculated. The company will have 30 days to respond, after which the tax man will have a further 30 days to either issue the original charge, a revised charge, or confirm that no charge need be paid.

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