- The government published a consultation on potential reforms to the UK’s transfer pricing, permanent establishments, and Diverted Profits Tax (DPT) legislation in June 2023. The broad aim of the consultation is to simplify the rules where possible, and to align them with internationally agreed principles in the OECD Model Tax Treaty and the OECD Transfer Pricing Guidelines. The consultation looked at various aspects of the UK rules, including:
- Transfer pricing of financial transactions including implicit support for loans and guarantees;
- Aligning the UK definition of a permanent establishment with the OECD Model Tax Treaty definition; and
- Bringing Diverted Profits Tax into the corporation tax regime and thereby the scope of the UK's double tax treaties.
- Timing: the government published a summary of responses to the consultation in January 2024 and will continue to engage with stakeholders on its proposals with a view to publishing draft legislation for consultation later in 2024.
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