A diverted profits tax comes into effect from today which is designed to ensure that all multi-national businesses pay taxes on the business they do in the UK. The Conservatives have acted to close down loopholes which have meant that some familiar high street brands were paying little or no corporation tax. Conservative candidate for Chipping Barnet, Theresa Villiers said:
“The Conservative-led Government has now delivered the lowest levels of corporation tax in the G20, with the reductions coming into effect today. But today we’re also introducing a diverted profits tax that tackles the minority of companies who use elaborate structures to send their profits abroad and avoid paying what they owe. Small businesses in our high streets in Barnet find it tough enough to compete with their big online competitors but it’s even more difficult if those competitors are able to escape paying the taxes that should be due.
A strong economy depends on low taxes, but it also depends on taxes getting paid. A strong economy is critical to everything else that we want to do as a country – you cannot invest in the public services we all rely on without it.
The diverted profits tax is a 25 per cent tax on multi-nationals' profits where they’re artificially shifted out of the country and will raise over £1 billion over the next five years. By taking action to make sure everyone contributes their share we are delivering taxes that build a strong economy and secure a better future for Britain."
David Cameron has taken action to push this issue up the international agenda by putting aggressive tax avoidance by big business on the agenda when the UK held the presidency of the G8.