“A crackdown on tax breaks for banks and tax avoidance by multinational firms will raise about £5bn over five years, Chancellor George Osborne has said. Rules allowing banks to offset losses made in the financial crisis against future profits will be tightened,” BBC News reports. “And a 25% tax is being imposed on ‘profits generated by multinationals from economic activity in the UK which they then artificially shift’ abroad. Banks will pay an extra £4bn in tax, and multinationals £1bn, he said.”
“Mr Osborne’s forecast that the measure would generate £4bn over five years carries a ‘very high uncertainty rating,’ according to the Office for Budget Responsibility (OBR), which publishes an independent assessment of government forecasts alongside the Autumn Statement,” The Beeb reports. “Multinational companies must pay their ‘fair share’ of tax, Mr Osborne said, adding: ‘My message is consistent and clear. Low taxes; but taxes that will be paid. This new Diverted Profits Tax will raise over £1bn over the next five years.’ However, BBC business editor Kamal Ahmed said the chancellor’s comments lack detail, and ‘an awful lot of work will have to be done on what exactly are diverted profits.'”
“The OBR also cast doubt on Mr Osborne’s assumption that the tax change would raise £1bn,” The Beeb reports. “Predicting how multinationals would respond is difficult. ‘The behaviour change is likely to be volatile and large due to the characteristics of the companies targeted by this measure,’ the OBR said.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Lynn Weiler” for the heads up.]